June 2017 Unemployment Update

Continuing our ongoing coverage of the labor market, the June Employment Situation release from the Bureau of Labor Statistics may signal the end of the tightening of the labor market.  The U-3 unemployment rate rose by 0.1% and the U-6 “underemployment” rate rose 0.2%, the first increases of the year.  Following on last month’s shrinking gains, this suggests at the very least that the labor market is stabilizing.  This is not surprising given the Federal Reserve’s recent decisions to raise interest rates, driven in part by the tight labor market.

January May June 6-Month

Change

U-3 Unemployment Rate 4.8% 4.3% 4.4% -0.4%
U-6 Unemployment Rate 9.4% 8.4% 8.6% -0.8%
Civilian Noninstitutional Population* 254,082 254,767 254,957 +875
Civilian Labor Force 159,716 159,784 160,145 +429
Employed 152,081 152,923 153,168 +1,087
Unemployed 7,635 6,861 6,977 -658
Employment-Population Ratio 59.9% 60.0% 60.1% +0.2%
Part-time for Economic Reasons 5,840 5,219 5,326 -514
Marginally Attached to Workforce 1,752 1,475 1,582 -170
  • Discouraged Workers
532 355 514 -18
* All numbers are in thousands


Last month’s substantial drop in the Civilian Labor Force number has essentially reversed itself, so part of the rise in the U-3 rate is due to more people actively seeking work.  At the same time, almost all of the year’s decline in Discouraged Workers disappeared in June.  Perhaps this will be another one month blip, but it would not be surprising to see unemployment moving back towards 5% in view of the Fed’s actions, and it would be consistent with historical patterns to see the U-6 number grow faster than the headline U-3 number as the labor market slows.

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