The U.S. labor market is softening, and with that shift so too is employment in retail.
The Bureau of Labor Statistics (BLS) said on Friday that total non-farm payrolls rose by 206,000 in June. Most of the job gains were in government, health care, social assistance, and construction. In retail trade, employment fell by an estimated 9,000 jobs after trending up earlier in the year. Warehouse clubs, supercenters and other general merchandise retailers added 5,000 jobs. The losses were primarily in furniture, home furnishings, electronics and appliance retailers, where 6,000 jobs were cut in June.
Related Stories
The unemployment rate in June rose slightly to 4.1 percent, up from 4.0 percent in May, and remains above the pre-Covid average of 3.7 percent in 2019. The jobless rate a year ago was 3.6 percent.
With an upcoming U.S. presidential election and President Joe Biden’s re-election on the line, Acting Secretary of Labor Julie Su pointed to the some positives in the latest data.
“With 13.2 million jobs added since President Biden took office and an average of 244,000 jobs added per month over the past three months, this progress continues the steady, stable economic growth that benefits working families,” Su said in a statement. “The Biden-Harris administration has implemented an investment agenda that prioritizes expanding the middle class and leaving no one behind. The solid job market continues to deliver employment and earnings opportunities for our growing workforce, with average hourly earnings increasing 4.4 percent over the year.”
In addition to noting a “new historic high” for labor force participation rate for prime working-age women at 77.8 percent, Su emphasized that “Bidenomics is rooted in the notion that growth must be broadly shared by diverse communities throughout this nation.”
But the ADP National Employment Report on Wednesday showed that job creation by private employers slowed for the third straight month in June, adding just 150,000 positions.
“Job growth has been solid, but not broad-based,” ADP chief economist Nela Richardson said. “Had it not been for a rebound in hiring in leisure and hospitality, June would have been a downbeat month.”
Sarah House and Michael Pugliese, economists at Wells Fargo, reported that while the 206,000 gain in non-farm payrolls were solid, the employment report was a “clear signal” that the American labor market is weakening. “June job growth topped consensus forecasts by [16,000], but this was more than offset by [111,000] of downward revisions to job growth in April and May,” they noted.
In addition, the economists noted that the cooling in the labor market extends beyond the data in the monthly report. Digging deeper, they said the number of job openings per unemployed person is “back to its pre-pandemic level,” while the share of workers who quit their jobs, along with small business hiring plans, “are below pre-pandemic averages.”
The two economists also noted that temporary help employment dropped a 49,000 in June and is down 515,000 from is March 2022 peak, another indication that labor demand is weakening. And the moderation in hiring alongside nominal wage growth—up 0.3 percent in June—could keep downward pressure on overall consumer spending and inflation.
They also believe that the sagging labor market could bolster a case for the Federal Reserve to begin reducing its fed funds rate beginning as early as its Sept. 18 meeting. They are forecasting two 25 basis point rate cuts, one in September and the other in December.
