The release of June nonfarm payroll (NFP) numbers was greeted with headlines such as “Job Growth Surged in June.” Of course, that surge was in comparison to May. The month-on-month changes can be quite volatile, and for that I reason I prefer to look at year-on-year (YoY) changes.
June’s NFP employment was up 2.5 million from a year earlier. While that shows that job growth is continuing, it also means the rate of job growth has been slowing since early 2015, as can be seen in the above chart. In the current expansion, the highest year-on-year job growth was 3.1 million in February 2015. In percentage terms, June’s YoY growth was 1.8% compared to 2.3% in February 2015 (see the red series in the bottom section of the above chart). For 2016 YTD (January thru June), average YoY growth is 1.9%, only slightly higher than the average since January 2012 of 1.8%. The slow, but steady job growth of this expansion continues.
NFP employment growth for the first half of 2016 was 1.12 million, compared to 1.39 million for the first half of 2015 (a drop of 19%).
Using the seasonally adjusted industry-level NFP data I’ve prepared a comparison of the first half of 2016 to that of 2015 (2016H1 and 2015H1 in the below graph), showing us how job growth is shifting.
A few industry-level observations:
- Education and health services continues to be largest source of job growth, contributing 29.8% in 2016H1, up from 25.7% in 2015H1.
- Professional and business services remains the second largest source of job growth, but its contribution dropped to 17.2% for 2016H1 from 22.8% for 2015H1.
- Construction’s contribution for 2016H1 was 4.5%, less than half that of 2015H1 (9.5%).
- Manufacturing was drag on employment in 2016H1 (-2.3%), compared to a 2.3% contribution in 2015H1.
- Local government contribution more than tripled to 6.6% in 2016H1 from 2.0% for 2015H1.