Economic optimism rises as U.S. job market adds 206,000 jobs
The U.S. job market is slowly stabilizing, as shown by the 206,000 jobs added in June, according to the Bureau of Labor Statistics. The industries driving this growth include government, health care, social assistance and construction.
Although more jobs were added, unemployment did increase, but barely, to 4.1%. Last month, the unemployment rate sat at 4%, so the increase was minimal month to month. The unemployment rate is currently higher than it was last year, when the jobless rate was 3.6%.
Government jobs led the charge for job growth, adding 70,000 jobs in June. This is much higher than the average monthly gain of 49,000 government jobs the U.S. has seen in the last 12 months. Local governments and state governments added the most jobs over all at 34,000 and 26,000 respectively.
The health care industry also added a substantial number of jobs at 49,000. However, this is lower than the average monthly gain of 64,000 seen in the last year. Hospitals and ambulatory services added the most jobs in the industry, both increasing by 22,000.
Another public service sector, social assistance, added 34,000 jobs in June, mostly in individual family services. This addition is also larger than the average for the last 12 months, which was 22,000 additional jobs.
Construction jobs grew in June as well, with 27,000 new jobs. The industries that lost jobs were retail, dropping by 9,000 positions. Furniture retailers also lost about 6,000 jobs.
Wages for many industries are up across the board, on average. Over the last year, hourly wages have risen by 3.9%.
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The general consumer outlook for the economy is back on the rise after months of decline. The Conference Board Consumer Confidence Index rose in May to 102, up from 97.5. A score of over 100 tends to signal a strong economy.
The Present Situation Index, which measures consumer opinions on current business market conditions, also increased. The index rose to 143.1 in May from 140.6 in April, indicating that there’s a more positive view of the current labor market.
"Consumers' assessment of current business conditions was slightly less positive than last month. However, the strong labor market continued to bolster consumers' overall assessment of the present situation," Dana M. Peterson, chief economist at The Conference Board said. "Views of current labor market conditions improved in May, as fewer respondents said jobs were 'hard to get,' which outweighed a slight decline in the number who said jobs were 'plentiful.' Looking ahead, fewer consumers expected deterioration in future business conditions, job availability, and income, resulting in an increase in the Expectation Index," said Peterson.
While the economic outlook is generally positive these days, the possibility of a recession still remains a major concern for many consumers.
"The Perceived Likelihood of a US Recession over the next 12 months rose again in May, with more consumers believing a recession is 'somewhat likely' or 'very likely'," Peterson explained.
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One area where there hasn’t been much improvement is the housing market. Affordability still remains a dream for many U.S. households. The second-quarter U.S. Home Affordability Report showed that the average-priced home remained less affordable compared to historical averages.
The affordability crisis is largely driven by high housing costs. Home prices reached a new high of $360,000 and mortgage interest rates are back up in the 7% range.
"The latest affordability data presents a clear challenge for home buyers. While home prices are increasing and mortgage rates remain relatively high, these factors are making homes less affordable," said Rob Barber, CEO of ATTOM. "It’s common for these trends to intensify during the Spring buying season when buyer demand increases. However, the trends this year are particularly challenging for house hunters, more so than at any point since the housing market boom began in 2012."
Wages aren’t keeping up with housing costs. Lending guidelines for home buyers typically dictate that only 28% of their income should go towards housing expenses. The Home Affordability Report shows that currently 35.1% of the average national wage goes toward housing costs.
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