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.
|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|
|Part-time for Economic Reasons||5,840||5,219||5,326||-514|
|Marginally Attached to Workforce||1,752||1,475||1,582||-170|
|* 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.