Broader U.S. Job Market Shows Resilience Amid Slowing Growth
According to today’s employment report from the U.S. Bureau of Labor Statistics, the construction industry added 27,000 jobs in June, a significant increase from the average monthly gain of 20,000 over the past year. This considerable growth illustrates the AEC’s resilience and continued demand for construction services despite broader economic challenges.
“People want those construction jobs,” said Paula Newton of CNN, emphasizing the attractiveness of opportunities within the construction industry.
Overall, the June employment report revealed a mixed but resilient labor market. The economy added 206,000 nonfarm payroll jobs. However, the unemployment rate edged up to 4.1%, the highest since November 2021, signaling a gradual cooling of the labor market.
Despite the modest job gains and rising unemployment rate, the labor market remains relatively strong. In addition to construction’s high number of jobs, government employment saw a significant increase of 70,000 jobs, health care added 49,000 jobs and social assistance added 34,000 jobs.
Sectors such as professional and business services and retail trade, on the other hand, experienced job losses, emphasizing the uneven nature of the recovery.
Additionally, revisions revealed there were 111,000 fewer jobs added in April and May than initially reported.
Uptick in Unemployment Signals Market Coming Into Balance
Unemployment clocked in at 4.1%, but Newton says it’s “nothing to concern yourself with. After three years of consistent job gains and a low unemployment rate, this small uptick in unemployment is, per Newton, “just another sign the job market is coming into more balance.”
While the unemployment rate increased slightly, the labor force participation rate remained steady at 62.6%. The number of long-term unemployed individuals rose by 166,000 to 1.5 million, accounting for 22.2% of all unemployed persons. The number of people employed part-time for economic reasons remained unchanged at 4.2 million.
Newton noted that in addition to the market coming into balance, the increase in the unemployment rate might provide the Federal Reserve with the leeway to consider lowering interest rates.
Courtenay Brown of Axios highlighted that job gains were in line with expectations but pointed out the signs of a cooling labor market, with the unemployment rate reaching its highest level since November 2021.
Average hourly earnings for all employees on private nonfarm payrolls rose by 0.3% to $35.00 in June, a 3.9% increase over the past year. The average work week for all employees held steady at 34.3 hours for the third consecutive month.
Economists Expect Further Cooling, Presenting Federal Reserve With Dilemma
The mixed signals from the June report present a challenge for the Federal Reserve, which is closely monitoring the labor market as it considers future interest rate decisions. While job growth remains robust, the rising unemployment rate and slowing wage growth suggest a cooling economy.
Economists widely expect the broader economy, including the labor market, to slow further in the second half of the year but stop short of falling into a recession. The Federal Reserve indicated in its latest economic projections that it expects to cut interest rates once this year, maintaining them at a 23-year high.
Fed Chair Jerome Powell emphasized the delicate balance the Fed must maintain. “We are well aware that if we go too soon, that we can undo the good work we’ve done in bringing down inflation,” he said, “And if we go too late, we could unnecessarily undermine the recovery and expansion.”
As the U.S. job market continues to navigate the post-pandemic recovery, the construction sector’s steady growth and the overall resilience of the labor market provide a silver lining amid mixed economic signals.
