Posted originally on the conservative tree house on July 8, 2022 | sundance
The Bureau of Labor Statistics (BLS) has released the June jobs report [Data Here] showing 372,000 job gains on the establishment survey of businesses. However, the April and May reports were revised downward by 74,000 jobs, and there is an odd disconnect between the survey of businesses and the survey of households.
The survey of businesses (BLS establishment report) shows job gains of 372k for the month of June, but the survey of households (BLS household report) shows that fewer people are working. The labor-force participation rate slipped to 62.2% from a previous high of 62.4%, fewer people are working.
This odd disconnect has many people wondering what is going on?
Wage growth comes in at 5.1% on an annual basis, which is far below the current BLS calculated rate of inflation at 8.6%. Meaning wage growth is not keeping up with inflation despite workers entering the labor force at a higher entry level wage.
Economists overall are flummoxed as job gains would indicate a strong economy. However, the actual economic activity, the creation of goods and services, is not growing. Quite the opposite appears. Orders for factory goods have dropped, inventories of currently available goods are climbing, and sales figures across a broad spectrum of companies are negative. The economy as measured by the creation of goods and services is stalled, but the economy as a measure of employment is firm.
Table B-1 of the BLS report shows where the jobs gains are being recorded. Employment in professional and business services added 74,000 jobs in June, employment in leisure and hospitality added 67,000. Transportation and warehousing added 36,000 jobs, and manufacturing increased by 29,000. Simultaneously, retail ‘general merchandise’ stores lost 7,000 jobs, and residential building construction lost 4,500 jobs.
It would appear that as spending priorities are definitely taking place; the jobs growth is in the current maintenance of lifestyle and not the ‘moving up’ in lifestyle. This would align with the general sentiment of the labor force that most people are just trying to get through the massive inflation impact and sustain their current rate of household expenses.
The decline in the labor force in June “is hard to explain,” said chief economist Aneta Markowska of Jefferies LLC, in light of the strong demand for labor. (link)
It’s really not that hard to figure out what is happening. Well, I should say, not that hard to figure out, unless your job is to pretend not to know things.