More than 213,000 jobs were created during the month of June, according to data released today by the U.S. Bureau of Labor Statistics, but some credit union economists are raising concerns about weak wage growth.
According to BLS, the U.S. civilian labor force grew by 601,000 in June, a 20 basis-point increase to 62.9 percent participation rate, resulting in an unemployment rate of 4.0 percent – a slight uptick from last month, but down from where it was one year ago (4.3 percent), noted Brian Turner, president and chief economist at Meridian Economics. Over that 12-month period, non-farm payrolls have increased by 2.4 million.
The number of long-term unemployed – those who have been jobless for 27 weeks or more – rose by 289,000 in June, but has sunk by about 237,000 from where it stood one year ago. The nation’s underemployment rate – which aggregates the unemployed with part-time workers desiring full-time jobs and those who have deferred their search over the past 60 days – stands at 7.8 percent, or about 12.6 million.
While the jobless rate was technically up – a fact Curt Long, chief economist for the National Association of Federally-Insured Credit Unions attributed to improved labor force participation – the bigger concern for both Long and Turner is overall wage growth.
"Wage growth remains stuck below 3 percent, which will provide some reassurance to the Fed that inflationary pressures remain relatively muted," cautioned Long.
Similarly, Turner said that, along with “soft wage growth,” the jobs report still “remains positive” in the sense that “we still have some capacity to grow above-trend without triggering too much inflation worry.”
However, Turner added, that the modest wage growth “most likely” places less pressure on the Fed to feel like “they’re behind the curve.”
“While the sunny outlook led Fed officials last month to boost the number of interest-rate hikes they expect in 2018 to four from three, the threat of an increasing trade war threatens to sap economic momentum, and a shrinking pool of qualified workers may slow the pace of future employment gains,” warned Turner.