4 Things to Know About June's Jobs Report

Bad news for the end-of-the-world crowd: June's jobs report was released Friday, and it was pretty good. 195,000 new jobs were created last month, according to the Bureau of Labor Statistics. That was the third-best June jobs report in the last 15 years. May and April's jobs numbers were revised higher by a combined 70,000 jobs. Both the S&P 500 (SNPINDEX: ^GSPC  ) and interest rates jumped, though both were looking up before the report was released. 

Here are four things know about the jobs report.

1. Average jobs growth is almost, sort of, decent
Any monthly jobs report is noisy and prone to revision. A better gauge is the rolling six-month average, which shows jobs growth of about 200,000 a month. That isn't great -- we need a little more than 100,000 jobs a month just to keep up with population growth -- but it's near the high of what the economy has been able to produce over the last decade:

Source: Bureau of Labor Statistics.

2. Revisions have been almost as important as the original jobs reports
Each jobs report is revised seven times -- twice in the two months after the original report, and once a year for five years thereafter. (There's nothing fishy about this; the BLS is constantly getting new data to revise its assumptions).

Revisions tend to be positive during a recovery and subtractive during a recession. Good news: Revisions during the last few months have been universally higher. By quite a bit, too:

Month

Original jobs growth estimate

Revised

February

236,000

332,000

March

88,000

142,000

April

165,000

199,000

May

175,000

195,000

Source: Bureau of Labor Statistics.

3. Not all jobs are created equal
Any job is better than no job. But not all jobs are created equal, and a big portion of jobs created in recent months have come from notoriously low-wage sectors. Leisure and hospitality accounted for 42% of June's gain. Of that segment, 52,000 jobs came from the "food services and drinking places" subsector. Retail jobs increased by 37,000. Meanwhile, manufacturing employment fell by 6,000.

Hordes of previously unemployed Americans may be rejoining the workforce, but still worse off than they were a few years ago. We are recovering, but not recovered.

4. It's still going to take a while to get back to normal
The Federal Reserve Bank of Atlanta has an online jobs calculator that lets you play around with different assumptions to see when the jobs market might be back to normal.

If we stay at the current rate of job creation, the unemployment rate will drop to 6% in about two years, and 5% by about 2017. By then, we'd by a full decade out from the beginning of the last recession, which is longer than it took for the job market to recover after the Great Depression (although that recover was boosted by World War II). We are dealing with nothing short of a historic disaster. June's jobs report doesn't change that. 

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Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On July 05, 2013, at 1:57 PM, Hjin wrote:

    5. A significant portion of the jobs created are part time positions.

  • Report this Comment On July 05, 2013, at 2:04 PM, TMFHousel wrote:

    ^ The number of workers employed part time for economic reasons has declined by 400,000 since last September.

  • Report this Comment On July 05, 2013, at 4:11 PM, navynukesupe wrote:

    ^Source?

  • Report this Comment On July 05, 2013, at 4:14 PM, TMFHousel wrote:
  • Report this Comment On July 05, 2013, at 6:05 PM, ExAMR wrote:

    100,000 is light for an estimate of break-even jobs growth: most economist estimates range from at least 130,000 to 250,000. Where do you get just 100,000?

    Another critical factor is the shrinking labor force - the percent of adults who are still working has declined significantly in the past several years, as more and more people give up looking. Until those people can return to full-time employment, simply adding enough jobs to keep up with population growth is an inadequate view of what "good" job growth numbers really are.

    Finally, TMFHousel: way to "cherry-pick" your statistics: last Sept was the high-water mark over the past 20 months, so comparing to that makes it seem like the trend is down, when it's not - look at the rest of the monthly figures at the source which you cited. A better way to get a balance perspective is to review the trends prior to the Recession: from 9/11 through March 2008, the economic part-time workforce was NEVER larger out of the 4 million range - and we're OVER DOUBLE that now.

    As long as we're quoting facts, let's take a CLEAR look at them, shall we?

  • Report this Comment On July 05, 2013, at 6:08 PM, bonasis wrote:

    looking at the report you cite-- in 2006-2007. the part time values are only roughly half 1/2 of the 2012 values in this report -- how is this a 40% decrease??? ... appears to be a roughly 100% increase to me...

    davud

  • Report this Comment On July 05, 2013, at 6:24 PM, DrJCA1 wrote:

    "Hoards of previously unemployed Americans may be rejoining the workforce, but still worse off than they were a few years ago. We are recovering, but not recovered".

    How on god's green earth is this a "recovery" when most folks are worse off then they were a few years ago? Most of these jobs are part-time and/or minimum to very low wage ones.

  • Report this Comment On July 05, 2013, at 6:58 PM, Holobyte wrote:

    I didn't know they were building that many McDonald's / Burger Kings / Walmarts. You think there is employment problems now, wait till they pass the amnesty pig. US citizens will loose their jobs and be replaced with legal/illegals because they aren't allowed in obamacare and companies don't have to pay for their medical. What a gift to agriculture and industry that uses foreign labor. US citizens will immediately be overpriced. Goodby.

  • Report this Comment On July 05, 2013, at 7:05 PM, xetn wrote:

    There is only one significant stat: the jobs report is pure BS! Else why all the revisions? Plus, the stats used to calculate the employment/unemployment figures keep changing.

  • Report this Comment On July 05, 2013, at 7:45 PM, greyhound44 wrote:

    The US BLS U 3 and U 6 are totally bogus and highly manipulated for political purposes.

    Full-Time employment was off 240,000 in June.

    The "real" US unemployment was 23.4%.

    shadowstats dot com

  • Report this Comment On July 05, 2013, at 7:47 PM, sandisanmina wrote:

    Only one fact is relevant, more and more employment is becoming low wage PART TIME employment. Americans cannot buy $30K autos and $400K homes, send their kids to ridiculously expensive schools on part time employment.

    The markets are fooling themselves as they go still higher, the entire economy at this stage is a bubble

  • Report this Comment On July 05, 2013, at 8:07 PM, cept4Grace wrote:

    How have we become a people that are angry with the government because it does not provide work for us? The NEEDS of our fellow citizens are the impetus that should provide us with worthwhile employment. We will find rewarding work when we strive to meet those needs through our diligent commitment to become educated and trained to best meet the needs of our countrymen. We still have the resources and talents that made us a great nation. We still have enough to share with those immigrants who still believe that the USA is a land of opportunity.

  • Report this Comment On July 05, 2013, at 8:53 PM, Saintmark01 wrote:

    It's always interesting to read the reaction to statistics. There are those who believe and there are those who doubt. Here's what I KNOW........

    I manage a business that is based on growth in the workforce. There was a perceptible improvement in our business eginning in late Q4 and it continued to steadily outpace last year, month after month. Based on where we're at half way through 2013 we anticipate about 6% growth YOY. As a result we will be adding roughly 25 well paying jobs in the next 90 days.

  • Report this Comment On July 05, 2013, at 10:11 PM, Ostrowsr wrote:

    I almost applied for a job today until I saw the 'you must agree that we can terminate your employment for no reason'. Fundamental change when you treat humans like garbage. This kind of company will be run by a "survival of the fittest" mentality. These are not jobs, these are the wealthy abusing the work force. Unsustainable.

  • Report this Comment On July 06, 2013, at 4:31 AM, pepper56 wrote:

    I find this information just in time because I am partially retired.

  • Report this Comment On July 06, 2013, at 8:40 AM, RavenandSunny wrote:

    Many of these jobs are at state parks, campgrounds, hotels, motels, golf courses, tourist-traps, etc., and will be gone by October, the workers will either look for another low paying winter-season job, or sign up for unemployment and work under the table. In any case, their pay scale is so low that they pay very little if any taxes.

  • Report this Comment On July 06, 2013, at 9:15 AM, TMFHousel wrote:

    <<100,000 is light for an estimate of break-even jobs growth: most economist estimates range from at least 130,000 to 250,000. Where do you get just 100,000?>>

    Old rule of thumb was 150,000. An aging population means the break-even figure will decline over time. You can play with this calculator to see how many jobs are needed to keep the unemployment rate steady. It's currently around 100,000.

    http://www.frbatlanta.org/chcs/calculator/index.cfm

  • Report this Comment On July 06, 2013, at 9:24 AM, TMFHousel wrote:

    Here's the six-month rolling average of part time workers (in thousands):

    June 2011: 8039

    July 8043

    August 8029

    Sep 8186

    Oct 8251

    Nov 8255

    Dec 8206

    Jan 8161

    Feb 8152

    March 7990

    April 7929

    May 7890

    June 7941

    It's false to say a significant portion of job gains have gone to part-time workers. They simply haven't.

  • Report this Comment On July 06, 2013, at 11:24 AM, himarcia wrote:

    I don't disagree with the article, but your English needs some work that spell check can't do

    "Hoards of previously unemployed Americans may be rejoining the workforce, but still worse off than they were a few years ago."

    Hoard: A hidden fund or supply stored for future use; a cache.

    HORDE: A large group or crowd; a swarm

  • Report this Comment On July 07, 2013, at 9:31 PM, skypilot2005 wrote:

    Also,

    The June "jobs report" showed a big jump in the number of people wanting to work full time but could only find part-time work. To 8.23 million.

    Sky

  • Report this Comment On July 07, 2013, at 10:09 PM, nhp2001 wrote:

    Not only did you overlook the "real" unemployment rate and the fact that a major segment of "new" job creation is part-time, but you also failed to note that one of the largest, if not the largest, sectors where new jobs are being created is in our already overwhelmingly gross federal government!

    Are you Barry's employees? Next you'll be touting the opportunities of Obamacare!

    Get real.

  • Report this Comment On July 08, 2013, at 9:08 AM, Bret28 wrote:

    Ditto on the part time. I read in IBD where this report was almost all part time employment

  • Report this Comment On July 08, 2013, at 2:39 PM, r2d23333 wrote:

    to those commenters who think BLS data are "totally bogus and highly manipulated for political purposes":

    I have worked with data from the major US statistical agencies (BLS, BEA, Census) for about 50 years. These agencies do an outstanding job considering their budgets. I know people in these agencies, and they adhere to the highest ethical standards and do their job in a non-partisan way (though there are those in Congress working to change that.) And, the agencies are totally open and honest in discussing the weaknesses of their data attributable to the surveys and other estimating methods used to develop these data. The revisions to the data do NOT mean the data are bad. Rather, they reflect the fact that improvements to the data become possible as more entities report in the raw data BLS uses to compile the statistics.

  • Report this Comment On July 08, 2013, at 5:40 PM, TMFHousel wrote:

    <<You also failed to note that one of the largest, if not the largest, sectors where new jobs are being created is in our already overwhelmingly gross federal government!>>

    Federal government employment has consistently declined for the last four years. While the overall population has increased by 35 million since 2000, federal employment is flat:

    http://research.stlouisfed.org/fred2/data/CES9091000001.txt

    <<Get real.>>

    Already on it!

  • Report this Comment On July 08, 2013, at 10:17 PM, mikecart1 wrote:

    I don't care what these jobs reports say. I AM the workforce. I don't need some new grad to count numbers and use some elementary level of consensus taking to extrapolate what the job creation rate is. I don't work retail or fast food so I don't know those numbers. What I do know are the DOW companies aka the 30 companies representing the stock market index that we all follow or ignore. I do know what the government is doing and that is NOT HIRING. So since major companies are not hiring, the government is asking old geezers to retire while furloughing everyone else, and that the majority of these new jobs are for meaningless positions that go up anyways in the summer, the end being near is still on the table. When it comes I will be there to scoop up the Big Sale.

  • Report this Comment On July 09, 2013, at 2:49 PM, sagitarius84 wrote:

    TMFHousel,

    I am not sure why you are even wasting your breath responding to those trolls who believe the world is going to end. They are going to believe the world is going to end no matter what facts you throw at them.

    It is simply the nature of the game that most people will never make it in life. Reading the comments under this article, I understand why.

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