Axios Macro

July 07, 2023
The June jobs report surprised to the downside (!) for the first time in more than a year. Still, the labor market remains very strong — as other indicators released this week suggested.
- We dig into the details below, plus a look at the historic surge in the share of 25- to 54-year-old Americans who are working. 💼
Today's newsletter, edited by Javier E. David and copy edited by Katie Lewis, is 665 words, a 2½-minute read.
1 big thing: The steady-as-she-goes job market
Illustration: Annelise Capossela/Axios
Sometimes the jobs report shifts the narrative about what's next for the economy and the Fed. There was no such shift to be found in the June numbers out this morning.
Why it matters: Job growth is moderating, with the 209,000 positions added in June the lowest thus far in the post-pandemic expansion. But overall conditions for American workers remain strong, with low joblessness and rising wages.
- That means the report — and others this week similarly pointed to a still-hot jobs market — will likely keep the Fed on pace to restart its rate-hiking campaign later this month and resume efforts to cool labor demand.
Driving the news: For the first time in more than a year, economists overestimated forecasts for monthly job gains, ending a record streak of better-than-expected data.
- The economy has added an average of 278,000 jobs each month this year — a healthy pace, though slower than the average 445,000 job gains in the same period in 2022. More striking is the continued strength of hiring in construction, an interest rate-sensitive sector that has not responded as much to the Fed's aggressive rate hikes.
- The unemployment rate holds near the lowest level in a half-century, ticking down by 0.1 percentage point to 3.6%.
- For Black Americans, the unemployment rate hit 6%, the second sharp rise from historically low levels.
Details: The report suggests the labor market is still hot, including strong wage growth. Average hourly earnings rose 0.4% in June, matching May's upwardly revised pace.
- Compared to a year earlier, wages have jumped by 4.4% — meaning pay growth is likely outpacing inflation by this measure. (The release of the June Consumer Price Index next week is expected to confirm that.)
The big picture: Earlier this year, a surge of workers came off the sidelines — helping ease shortages that have dogged the labor market. That hasn't continued in the spring and summer months.
- The number of workers not in the labor force rose for the third straight month, dampening hopes that an increase in worker supply could help bring workers into the labor force.
What to watch: All of it paints a picture that does little to change the Fed's perspective.
- Officials held off on raising rates in June but signaled two more rate hikes by year's end. The robust labor market, with significant wage gains and subdued relief from workers entering the job market, means they will likely follow through with that at their policy meeting later this month.
What they're saying: "Jobs growth has slowed but remains too strong to justify an extended Fed pause. More significantly, with average hourly earnings surprising to the upside, wage pressures are still too strong," Seema Shah, chief global strategist at Principal Asset Management, wrote this morning.
- The report gives the Fed "little reason to hold off from hiking at the July meeting."
2. A new 22-year high for prime-age workers


One of the best pieces of June numbers news was a new multidecade high in the share of people employed in their prime working years.
Driving the news: The employment-to-population ratio among Americans ages 25 to 54 inched up to 80.9% in June. The last time it was that high? April 2001.
- The all-time high in that share was April 2000, when it reached 81.9%.
Flashback: This is a dramatic contrast with the expansion that followed the 2008 recession, which featured a deeply depressed employment-to-population for years.
- The current expansion began just over three years ago. At the equivalent point following the end of that recession (August 2012), the prime-age employment-to-population ratio was 75.7%.
- If that were the current rate, it would mean 5.4 million fewer Americans working.
Between the lines: Women have driven the surge. The 75.3% of 25- to 54-year-old women working in June is the highest on record in data that dates to 1948. That number was 74.9% back when the overall employment-to-population ratio peaked 23 years ago.
The bottom line: This expansion is putting Americans to work at rates previously unseen in this century.
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