U.S. job gains were strong in June after a weak May. What does that mean for the outlook for the consumer economy?
Well, it means that the true growth trend is neither strong nor weak—and is easily disrupted by weather, labor strikes and local market differences.
The strong June job gains were primarily the result of a reversal of the Verizon strike and weather effects that artificially depressed job gains in May.
The bounceback hides vulnerability in the underlying growth trends—just as the May falloff exposed it. The vulnerability remains focused in certain state and local markets and primarily reflects a widening impact of declines in oil and energy jobs.
Nevertheless, the jobs rebound will mean the kind of pickup in overall consumer and retail spending foreshadowed by the June Spending Confidence Index™.
The strength and weakness in spending will reflect these job trends:
- Weak states. Ten states are registering flat or declining jobs growth in recent months. The weakness is related to oil, mining, and other job losses in the worst-hit states: Alaska, Kansas, Louisiana, Maine, Montana, New Mexico, North Dakota, Oklahoma, West Virginia, and Wyoming.
- Metro markets. The major cities and metro markets are faring better. The top 30 metro markets representing one-third of all jobs are growing at a 2% rate or better. The lagging metro markets include New Orleans and Houston—reflecting oil job losses, but the laggards also include Pittsburgh and Buffalo.
- Strong markets. Amid the pockets of weakness, 12 states and 16 of the top 50 metro markets have been able to sustain strong job growth above 3.0% in recent months. Florida and California are among the biggest states sustaining strong growth—especially in key metro markets.
The local differences are hidden amid the overall gain of 287,000 jobs in June—and the revised gain of just 11,000 jobs in May.
See the table summary for detail on the latest job numbers.
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