June 2017 Unemployment Update

At best unemployment is plateauing, and it may be rising again.

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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