July 2017 Unemployment Update

Continuing our ongoing coverage of the labor market, the July Employment Situation release from the Bureau of Labor Statistics continues to suggests that the labor market has stabilized, with the tightening of the first half of the year tapering off. The headline U-3 unemployment rate recovered 0.1% to return to May’s level, and the U-6 “underemployment” rate remained unchanged at a level slightly above its May low. This consistent with the Federal Reserve’s decision to leave interest rates unchanged in July.

January June July 7-Month

Change

U-3 Unemployment Rate 4.8% 4.4% 4.3% -0.5%
U-6 Unemployment Rate 9.4% 8.6% 8.6% -0.8%
Civilian Noninstitutional Population* 254,082 254,957 255,151 +1,069
Civilian Labor Force 159,716 160,145 160,494 +778
Employed 152,081 153,168 153,513 +1,432
Unemployed 7,635 6,977 6,981 -654
Employment-Population Ratio 59.9% 60.1% 60.2% +0.3%
Part-time for Economic Reasons 5,840 5,326 5,282 -558
Marginally Attached to Workforce 1,752 1,582 1,629 -123
  • Discouraged Workers
532 514 536 +4
* All numbers are in thousands

While the general trend is stable, the loss of all improvement in the discouraged workers since the start of the year, as well as the rise in marginally attached workers is a little disturbing. However, given the typical spread between the U-3 and U-6, it’s probably appropriate to consider this noise given the otherwise positive tone of the year. As long as the Fed holds off on interest rate increases and the White House doesn’t precipitate any major economic crises by bungling the budget or debt limit processes (or declaring major trade or conventional wars), the labor market will probably remain healthy for the near future.

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