US Jobs Report Review: a key recession indicator has been triggered
US Jobs Report Review: a key recession indicator has been triggered
US cyclical employment growth ex-manufacturing has turned YoY negative - history says that a US recession may now only be months away.
Executive Summary
The US unemployment rate fell from 3.7% in May to 3.6% in June — this marks the third time since August 2022 that the US unemployment rate hit 3.7%, only to move lower in the following month.
Total nonfarm payrolls grew at the slowest monthly pace since December 2020 in June.
The extent of the recent moderation in job growth has been masked by government jobs, which on a 6-month moving average basis, grew at a record post-COVID pace in June.
Monthly private payroll growth of 149k was the lowest since December 2020, and below the 2016-19 average of 168k.
While annual nonfarm payroll growth of 2.4% is relatively robust, 3-month annualised growth has declined to 1.9%.
Annual nonfarm payroll growth (2.4%) continues to significantly exceed annual employment growth as measured by the household survey (1.8%), indicating that there could be an issue with the BLS’ business net birth-death estimates (which can occur around turning points in the economy, such as during a shift toward…