Labor Market – Payrolls, Layoffs, and Average Hourly Earnings

While a portion of labor market data has been trending in the wrong direction, we believe the current setup is not indicative of a meaningful contraction in broader economic activity. However, we will continue to monitor these trends closely as we move through the rest of the year within the scope of the larger economic condition set.

On a m/m basis, total nonfarm payrolls slowed to 206,000 in June compared to the downwardly revised 218,000 in the prior month. For May and April, net revisions came in at -111,000. While acknowledging the slowdown, it is worth noting that the average monthly net change over the last year has been above the average of 190,000 from 2015 to 2019.

Source: Macrobond.

In y/y terms, total nonfarm payrolls slowed to 1.7% y/y, which is in-line with the average y/y growth rate from 2015 to 2019. While the pace of hiring has slowed, the m/m and y/y numbers could be interpreted as moving toward more normal levels.

Source: Macrobond.

At the same time, initial claims continue to come in at relatively low levels with the most recent week posting 238,000. Compared to last year, this is down by 4% and has been negative on a y/y basis for most of 2024.

Source: Macrobond.

Turning to consumer income, average hourly earnings increased by 0.3% m/m in June but slowed to 3.9% y/y from 4.1% in the prior month. The average y/y growth rate from 2015 to 2019 was 2.7%.

Source: Macrobond.

Hiring has slowed, layoffs have not increased meaningfully, and nominal earnings growth remains well above trend. Over the next few months, the path of labor data could garner more attention as a continuance of the current trajectory would likely bring the topic more into focus for the Federal Reserve as it sets monetary policy.

The views expressed herein are presented for informational purposes only and are not intended as a recommendation to invest in any particular asset class or security or as a promise of future performance.  The information, opinions, and views contained herein are current only as of the date hereof and are subject to change at any time without prior notice.