The payroll increase of 287,000 is about as indicative of the U.S. economy's vitality as the revised May figure of 11,000 was/is of precipitous decline. The monthly numbers in the two-survey jobs reports, as always, must be considered in the context of noise-based volatility. The average monthly increase in 2016 has been 172,000.
Lower-quality jobs again played a big part in new jobs created. Leisure and hospitality and retail trade represented 89,000, while the end of the Verizon (VZ - Get Report) strike accounted for a big swing in telecommunications (a wash from May). Healthcare and social services remained a big job growth sector with ongoing implementation of the Affordable Care Act, adding another 58,000 jobs in June.
One bright spot cited by the perma-bulls on the U.S. economy was a 2.6% increase in hourly wages versus 2015. But year-to-date wages are up about 1.3% in real terms, down from the paltry 2.2% growth in 2015. Wage growth remains sluggish because the U.S. economy continues to suffer from a severe labor supply overhang, masked by the historically low participation rate, even after accounting for retiring baby-boomers.
A perhaps more accurate estimate of the real unemployment rate, adjusted for normalized participation rates that account for baby-boomer retirement, ticked up again in June and remains above 7%.
It would take over three years of average net jobs growth of 170,000 per month to reach full employment and trigger sustained, meaningful real wage growth not seen since the late-1990s. Moreover, that growth would need to occur after 84 straight months of growth, the fourth longest period between recessions since WWII, in the face of a host of global economic headwinds.
Unfortunately, the June jobs report indicates no changes to this landscape.