Introduction

Welcome to Recruiting Realities, where we bring you the latest developments and insights in recruitment. Today, we’re diving into the June 2024 US jobs report with our in-house labor market economist, David Garrett. We’ll explore what the numbers mean for the labor market, including shifts in job growth, unemployment trends, and some early warning signs we’re seeing. 

Yazad Dalal: Hi everyone. I’m Yazad Dalal, Chief Growth Officer here at Joveo and welcome to Recruiting Realities, where we bring to you the latest developments and insights in recruitment. Today, we’re once again talking to our own in-house labor market economist, David Garrett, about the US jobs report for June 2024. Hello, David. 

David Garrett: Hey, how’s it going?

Yazad Dalal: I’m awesome. David, the most recent US jobs report came out for the month of June. The US labor market, still gaining jobs, gained 206,000 jobs in June, which was in line with expectations, but the unemployment rate has now continued upwards for a third month in a row, increasing to 4.1%, the highest level since 2020. And I think the first time since November 2021, that the jobless rate was above 4%. And the job growth that we did have was incredibly narrow in the month of June. I think government and healthcare jobs accounted for nearly three-fourths of the total job gains.

Sixty percent of the private sector payroll growth comes from the healthcare sector alone. So we’re gonna talk about that. And for our listeners at Joveo, we publish Interactive Insights across all major occupations in the US. Please check that out on our website, joveo.com/interactive-insights.

So David, I have lots of questions. Let’s get started. What are your major takeaways from the June Bureau of Labor Statistics jobs report?

David Garrett: Yeah, so I mean, unfortunately, unlike the last report, the major takeaways are much more negative. The last one was kind of, as I mentioned, more of a Rorschach test, where you could see negative and positive. And on top, I really want to start with discussing the revisions that the BLS had made to April and May’s reports, where they decreased the total number of job gains by around 110,000, which brought the average three-month average for payroll gains down to the lowest level since January of 2022. Along with this, annual wages have also increased at the slowest pace in the past three years. So you take that plus the expanding labor pool from increasing unemployment, as you mentioned, and it really does raise some warning signs in the job market.

And focusing on unemployment for a minute, until recently we were only seeing a fairly consistent decline in the job openings rate after it reached its peak around March of 2022. I think it’s like 7.4%, far higher than any average we’ve seen or any rate we’ve seen. And when looking at the Beveridge curve, which is a core concept of labor econ.

Yazad Dalal: Wait a second, Beveridge curve, I assume it’s not about beer.

David Garrett: No, although that might be better, more entertaining. No, it’s a core concept in labor econ. It compares the job openings rate with the unemployment rate. And for those who want to visualize it, you have unemployment on the x-axis and job openings on the y-axis.

Yazad Dalal: So I’m basically in math class again with you, David.

David Garrett: Yeah, basically, a lot of math going on. We see that the rate of job openings has declined, but the unemployment rate remained relatively consistent for a while. So the curve was kind of moving down. And the reason it was so significant is because having unemployment rates stay consistent and job openings rate declining kind of marked a return to normalcy. And this outward shift is becoming concerning because it usually only shifts out to the right when the economy is slowing down or we’re heading into a recession. And Scott Anderson, the chief economist at BMO Capital Markets, even said that the alarming increase in the unemployment rate over the recent months is really definitive evidence that the labor market is cooling down significantly.

Yazad Dalal: So that’s starting to sound maybe not scary, but like some mild warning signs, the X and the Y axis on the Beveridge curve are basically telling you that we only see this when there’s some impending doom, which is not a nice feeling. But I know what goes up must come down. I also know David that in the recent report, we saw some large job losses in temporary help services, which were down nearly 50,000 for the which brought the overall professional and business services super sector down for a total loss of 17,000 jobs. That doesn’t sound like a lot. What’s the significance of this loss? What does it mean for the overall labor market?

David Garrett: Yeah, so temporary help is actually a very interesting category. It’s something that’s actually heavily and closely watched by many economists, it kind of serves as a forward-looking data point for what is otherwise sort of more of a lagging indicator of the labor market. And think about it this way, if companies are growing, they’ll get temporary help, they’ll get interns until they can hire more full-time positions. But when times are tough, temp workers are usually the first to be dropped, right? This also corresponds to something we’ve talked about in previous episodes about the end of The Great Resignation era. We’ve seen a decline in the number of people switching jobs over the past few months as companies and employees are holding onto each other longer. I know a lot of companies are, with layoffs and things like that happening, a lot of people are more hesitant to look at switching around.

And so this is also a clear sign that the economy really has continued to slow down. And I think it’s definitely something that should continue to be monitored by those following the labor market moving forward.

Yazad Dalal: I think that’s maybe not terrible, terrible news, but some signals that things are slowing down and that we could probably look forward to more negative incline in the coming months. You and I will see each other again next month. So first of all, thank you, David. And thank you to all of you for joining us on Recruiting Realities. Don’t forget to visit us at joveo.com/interactive-insights.

Talk to you soon.

Conclusion

Thank you to all our listeners for tuning in to Recruiting Realities. The June jobs report brings some important signals about the labor market cooling down and what that might mean moving forward. For deeper insights and data across major US occupations, be sure to check our reports. We’ll see you next time!