Employment growth cools a bit as the U.S. adds 209,000 payroll jobs in June.
This week’s economic indicators were mostly about the labor market, and they suggested some modest cooling. However, unemployment remains quite low, and the labor participation rate is stuck well below the pre-pandemic level.
Within transportation, jobs in for-hire trucking are mostly holding steady, although continued failures of small carriers suggest falling driver capacity overall. Employment for parcel/local delivery and warehousing and storage continue to decline slowly.
Employment situation
The U.S. in June posted the weakest seasonally adjusted job growth since a loss of jobs in December 2020, although the gain was still healthy by pre-pandemic standards. Payroll employment rose by 209,000 jobs following downward revisions to preliminary April and May estimates.
Employment in June was 3.8 million payroll jobs, or 2.5%, above February 2020. However, payroll employment is still about 5 million jobs below where it would have been by now based on the trend in place before the pandemic.
The unemployment rate edged lower to 3.6%. The labor participation rate held at 62.6% for the fourth straight month. Average weekly earnings for private-sector employees rose 0.7%, which is the strongest gain since January. Earnings were 3.7% higher y/y.
One factor in the recent softening of job growth has been the leisure and hospitality sector, which was hit hardest by the pandemic and in 2021 and 2022 frequently posted the economy’s strongest growth. Leisure and hospitality jobs were up just 21,000 in June following gains of only 11,000 in April and 26,000 in May. During 2022, the monthly average growth had been about 88,000. The 2021 average was more than 200,000 jobs added per month.
The only significantly negative major sector m/m was trade, transportation, and utilities. Retail shed more than 11,000 jobs, led by building materials and garden supplies. Transportation and warehousing employment was down 6,900, led by decreases of about 7,000 each for couriers and messengers and warehousing and storage. Those declines were partially offset by increases in air transportation and passenger ground transportation. (For a discussion of trucking jobs, see the Trucking section below.)
Job openings
Unfilled job positions in the U.S. at the end of May were 4.8% lower, seasonally adjusted, than they were at the end of April. The 9.8 million job openings were higher than the March level but otherwise the lowest since April 2021. Job openings were down about 14% y/y but still more than 40% above the pre-pandemic month of February 2020.
ISM manufacturing index
The Institute for Supply Management's closely watched manufacturing index declined just under a point to 46%. As measured by the ISM index, the manufacturing sector saw its seventh straight month in contraction territory.
One of the most important components of the index as it applies to freight is production, which declined 4.4 points after just one month in slight expansion territory. One somewhat encouraging development was a 3-point increase in the new orders component, but it remains in contraction territory where it has been for 10 months.
Mortgage rates
Mortgage rates in the latest week rose to their highest level since November. The rate on a 30-year fixed-rate mortgage increased a tenth of a point to 6.81%, according to Freddie Mac. Mortgage rates have been close to that level recently, but they have not exceeded that rate since the week ended November 10, 2022.
Diesel prices
The national average price of on-highway diesel fell 3.4 cents to $3.767 a gallon during the week ended July 3. Although the decrease was not especially large by historical standards, the market had seen only one larger decrease since early May.
Prices were down on average in all regions except for California, where prices were up just over 1 cent. Prices are now below $4 a gallon except for the West Coast, New England and the Central Atlantic.
Underlying factors do not seem to offer any prospects of significant increases in the near term. Crude prices are still running around $70 a barrel, and distillate production and inventories are stable.
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