The Bureau of Labor Statistics (BLS) reported that there were 206,000 jobs created in June, which was just above estimates of 200,000 new jobs. However, there were big negative revisions to April and May, which shaved 111,000 jobs from those months combined. The unemployment rate rose from 4% to 4.1%.
What’s the bottom line? While the headline job growth figure beat estimates, future revisions lower are a very real possibility, given that we continue to see this pattern from the BLS. Plus, it’s important to look at both surveys within the Jobs Report, which told two different stories regarding job growth. The headline job number (+206,000) comes from the report’s Business Survey, which is based predominantly on modeling and estimations. However, the Household Survey’s job creation component (which is considered more real-time because it’s derived by calling households) showed only 116,000 job gains, much lower than the headline number. Plus, the data showed we continue to lose full-time jobs while gaining part-time workers, which is a theme we’ve seen for quite some time.
The Unemployment Rate also rose from 4% to 4.1%, the highest level since November 2021. This increase triggered the Sahm Rule, which portends a recession with a high degree of certainty. Named after former Fed economist Claudia Sahm, this recession indicator flashes when the three-month moving average of the unemployment rate rises by 0.5% or more relative to its low during the previous 12 months.