Labor Market by the Numbers
The big number: The unemployment rate increased to 4.3%, the highest since October 2021 with the number of unemployed Americans increasing from 6,811,000 to 7,163,000.
- The unemployment rate has slowly ticked up over the past few months and is up 0.8% from the 12-month low (3.5% in July 2023).
- Some are raising the alarm that the Sahm Rule, a principle developed by former Fed Economist Claudia Sahm to help identify the start of a recession, has been triggered with July’s observation. Claudia Sahm herself recently noted the limitations of this tool and argued that the US is not in a recession, albeit coming closer to one.
- In this instance, the rising unemployment rate is largely due to the surge in immigration and rising labor force levels rather than a decline in labor demand, which is what the Sahm rule was designed for.
Job postings: In June 2024, the total number of job openings in the manufacturing industry decreased to 486,000, this is down from May, where we saw 586,000 manufacturing job openings.
- Manufacturing job openings data has been volatile the last few months as the labor market has started cooling off.
- Job openings have eased from pandemic highs (997,000 in April 2022) but still remain slightly above pre-pandemic levels (432,000).
Durable goods job openings decreased to 323,000 in June from 411,000 in May. The volatility we’re seeing in the JOLTS data is largely due to durable goods manufacturing.
Nondurable goods mostly stayed the same, edging slightly downward to 164,000, down from 175,000 in May.
Hires decreased to 345,000, from 354,000 in May.
Separation increased slightly to 358,000 from 352,000 in May.
Quits stayed about the same, decreasing slightly to 213,000 down from 214,000 in May. Churn has eased from pandemic highs as workers are less likely to quit their jobs without the prospect of finding a new one, which should take significant pressure off manufacturers needing to replace talent.
Layoffs and Discharges increased modestly to 124,000 in June, up from 119,000 in May.
By the numbers: Across the entire economy, there were 8,184,000 job openings in June, down from an upwardly revised 8,230,000 in May.
For every 100 job openings in the U.S. economy, there were 83.2 unemployed workers.
- There continued to be more job openings than people actively looking for work, even as that ratio has narrowed notably. One year ago, there were only 66 unemployed workers for every 100 open jobs. Looking beyond openings, a sustained focus on retention is essential for manufacturers.
Manufacturing employment: remained mostly unchanged in July, slightly rising to 12,953,000 manufacturing employees in July 2024, adding 1,000 employees from June.
- Pre-pandemic (2017-2019) the sector averaged 12,648,000 employees per month.
- Durable goods manufacturing stayed level at 8,129,000 employees while non-durable goods manufacturing gained 1,000 employees in the sector, rising to 4,824,000.
- For durable goods, nonmetallic mineral product manufacturing saw the largest increase with 2,000 employees added while non-durable goods saw the largest increase in paper manufacturing, adding 2,400 employees.
Average hourly earnings of production and nonsupervisory workers in manufacturing rose 0.47% to $27.92 in July, with 5.5% growth over the past 12 months. As such, wages continue to rise despite softer hiring over the past year.
Nonfarm payrolls: rose by 114,000 in July, well below the consensus expectation of 185,000.
- The labor force participation rate increased to 62.7%.
Key takeaway: The labor market has cooled significantly over the past year.
- Job openings are down significantly over the past year, and nonfarm payroll hiring has slowed.
- While the manufacturing labor market is also cooling, manufacturing employment remains stronger than the labor market writ large.
- Manufacturers continue to cite workforce challenges as their top concern.
