The June 2023 jobs report reflects a mixed picture of the US labor market, with modest job growth and shifting dynamics among different business sectors. While nonfarm payrolls increased by 209,000, marking a considerable drop from the previous month, small and midsize businesses spearheaded the job creation, whereas large businesses experienced a decline in employment. Additionally, the unemployment rate saw a slight decrease, but a broader measure of joblessness increased. Despite these fluctuations, wages showed a positive trend, surpassing expectations with a 4.4% year-on-year increase.
Job Creation by Business Size
Small and midsize businesses emerged as the main contributors to job growth in June. Small businesses added 299,000 jobs, demonstrating their resilience and entrepreneurial spirit. Midsize businesses also fared well, creating 183,000 jobs. However, large businesses experienced a setback, shedding 8,000 jobs during the same period. This discrepancy suggests a shift in the employment landscape, with smaller enterprises leading the charge.
Unemployment Rate and Jobless Level
The unemployment rate for June stood at 3.6%, a decrease of 0.1 percentage point compared to the previous month. Although this decline may appear positive, it is important to consider a broader measure of joblessness. The more comprehensive jobless level, which accounts for discouraged workers and those working part-time but desiring full-time employment, rose to 6.9%. This increase indicates that there are still underlying challenges in the labor market, despite the headline unemployment rate improvement.
Wage Growth Exceeds Expectations
One positive aspect of the June jobs report is the notable wage growth. Wages increased by 4.4% compared to the previous year, slightly surpassing expectations. This growth indicates that workers are benefitting from a tightening labor market, as employers compete for talent. Rising wages not only boost consumer spending power but also enhance overall economic resilience. However, it will be crucial to monitor wage growth in the coming months to ensure sustainable improvements in workers' purchasing power. “We continue to work with our client partners to deliver the wages needed to retain talent in the industry.,” said Kelly Brown, President of BGSF’s Property Management Division. “In our world, construction and skilled trade service compete for the talent we hire, so this is something we have to monitor very closely to keep the talent we attract engaged in the roles we place them in.”
Decreased Job Creation and Government Boost
June's job creation figures, while still solid historically, experienced a significant drop from the previous month. With a downward revision of May's numbers, June's total of 209,000 jobs was the slowest month for job creation since December 2020 when payrolls fell by 268,000. However, this decrease would have been even more pronounced without the boost in government jobs. Government employment increased by 60,000, with the majority coming from state and local levels. In order to help meet the increasing hiring demand from local governments. “BGSF is a proud partner with HGACBuy a cooperative purchasing program allows local governments and other public entities to purchase goods and services through pre-negotiated contracts with vendors, to help the increasing hiring demand and project solution needs from local government.”, said Eric Peters, President of BGSF”s Professional Division.
Deviation from Expectations
The June jobs report marks a notable deviation from economists' expectations, representing the first time in 15 months that nonfarm payrolls fell short of Wall Street forecasts. Economists had anticipated the addition of 225,000 jobs, but the actual figure of 209,000 suggests that the labor market's recovery may be more nuanced and complex than initially predicted. This disparity highlights the need for flexibility in forecasting and the importance of considering multiple indicators to gauge the health of the economy accurately.
The June 2023 jobs report depicts a labor market characterized by modest job growth, contrasting trends among different business sizes, and mixed indicators of unemployment. Need help with your workforce challenges? You’ve come to the right place, let BGSF help you manage your workforce needs. Contact us today.