Optimism surrounded the release of the June U.S. Labor Department Jobs Report, but although the numbers were better than expected, we still have plenty to worry about.
Employers added 288,000 jobs in June, the Labor Department reported Thursday. The unemployment rate dipped to 6.1% from 6.3%, the lowest level since September 2008.
Economists had projected nonfarm payrolls to have risen by 215,000 last month. That was the second-highest forecast in the five-year economic recovery. The only time a consensus forecast was higher was in May 2010, when figures were substantially inflated by the temporary hiring of census workers.
The unemployment rate, meanwhile, was expected to have held steady at 6.3%.
Despite some encouraging figures in the jobs report (released Thursday instead of Friday because of the 4th of July holiday), it is still peppered with troubling data.
"For the second month in a row, the jobs report contained both good and bad news," Steven Pressman, professor of economics and finance at Monmouth University in West Long Branch, N.J., told Money Morning.
"While not a reason to set off fireworks and celebrate the end of a bad jobs market, this is a big step after many years of bad jobs data," Pressman continued. "As the unemployment rate fell over the past several years, this decline was mainly due to fewer people looking for work. We now have two months of data showing some real improvements in the labor market. There are actual job gains rather than falling unemployment rates as a result of people no longer seeking work."
Yet worrisome signs persist.
"There are still many people who want a job but are not counted as unemployed because they have not been looking for work," Pressman added.
The labor force participation rate remained stuck at 62.8% (a 36-year low) in June for the third consecutive month. Before the Great Recession, which officially began in December 2007, the labor force participation rate was 66%.
Another major problem is the kind of jobs added, and here's why...
The bulk of job creation last month came from low-paying sectors. High-paying industry job growth, meanwhile, lagged - a trend that has endured since 2008.
Also, a good chunk of the jobs created in June were part-time jobs, although workers wanted full-time employment. According to The Wall Street Journal, only one in five of the long-term unemployed has returned to lasting, full-time work since 2008.
As Money Morning Chief Investment Strategist Keith Fitz-Gerald said Thursday, "I fear we are becoming a nation of burger flippers rather than a nation building careers. Job quality stinks. Millions of Americans are still hurting and, I fear, falling worse behind."
With the June report, the economy has now added 200,000 jobs a month for the past five months. That's the first such stretch since September 1999 - January 2000. The surprisingly resilient year-to-date job market is in stark contrast to the limping U.S. economy that contracted 2.9% in the first quarter of 2014 - the worst performance in five years.
Plus, it's been a slow and painful jobs recovery.
It's taken a full 76 months for the number of people working to get back to the previous peak. During the same period, however, the U.S. working-age population increased by more than 15 million. Economists at the Economic Policy Institute estimate that 7 million more jobs would have been needed to keep up with population growth.
Following are 11 key takeaways from the June employment report.
The numbers included in the U.S. Labor Department Jobs Report released Thursday also raise another important issue.
Despite a still-cloudy employment picture, the improving tone of the labor market is sure to spur debate regarding the timing of the first interest rate increase by the U.S. Federal Reserve.
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