The US employment data for June have exceeded expectations, and the news has been released on a “Jobs Thursday”, in anticipation to the Independence Day Holiday.
Economists had estimated an increase in the number of jobs with 215,000 in June, but reality was so much better than that. Employers created new 288,000 jobs, 73,000 more than anticipated. In 2013, the overall number of new jobs was the highest in the last 8 years: 2.495 million. The unemployment rate dropped to the lowest level (6.1%) since September 2008, the month when the financial crisis set in as a global economic catastrophe.
Although it has often happened for the good headline data to be undermined by the fine print at the bottom of the page, this has not been the case with June 2014. The rate of unemployment decreased not because of a high retirement rate but because 325,000 fewer people were unemployed and 407,000 more people had jobs.
The figures for April and May were also positive, and to make news even better, workers got higher pays. There was a nice 0.4% rise in the index of weekly payrolls for the private sector, which indicates a better hourly pay and a longer workweek.
Things look good, yet such great improvements have occurred before, being followed by more sluggish periods. A similar situation happened in January 2012, when reports boasted with 360,000 new jobs. For April, May and June 2014, we have an average job grown of 272,000 net new jobs. Yet, to continue the comparison with the beginning of 2012, the average month increase, back then, was 276,000 jobs per month.
The same situation is obvious in the yearly average, with 2014 having the highest recovery so far (2.495 million jobs) but the figures are only slightly higher than the 2.462 million of March 2012 or the 2.461 million of November 2013. So far, there is nothing spectacular, even if data is positive!
It seems like for the first time in five years after the economic crash, the economy shows real above-trend growth. And this may be the case indeed! However, the assessment of the economy should not reflect our hopes but rather have the support of solid economic data indicating credible and consistent improvement. This is the tough lesson that we should all learn from this slow five-year recovery.
Without sounding pessimistic, we should keep the focus on real facts. The current positive situation may also be a temporary consequence of the bad winter weather that forced many schools to continue their activity longer into June than usual.
In the middle of June, there were a high number of administrators and teachers on the payrolls. This is a higher than normal number for this time of the year, and many of these jobs may no longer appear in July’s numbers. There was a 5,000 jobs rise in private educational services and 20,000 local and state government jobs. Some of them could prove temporary as well.
Nevertheless, the economic growth is happening for real, we do have more jobs; the data mentioned above do not undermine that reality. The only point here is that we should not take the latest numbers released as conclusive. Figures do indicate a promising reality, but this hint remains to be confirmed by facts.
We can hope, trust and verify, there is not much else to be done. Hopefully, reality will exceed our expectations.