US payrolls expanded by 80k in June, making for a soft June quarter. Payrolls growth averaged 73k per month in the June quarter, down on the 225k per month achieved in the March quarter. While some of this was related to seasonal conditions, there was also a moderation in underlying jobs growth over the quarter. The unemployment rate remained at 8.2% in June.
Private payrolls expanded at an average 91k per month over the June quarter with Government sector jobs providing its now familiar offset. Private sector job growth remains relatively broad-based, but low overall. That continues to be consistent with a non-robust economic recovery.
Aggregate hours worked were up over the quarter, but well below the pace in the March quarter. With productivity growth having slowed recently, that supports our view that Q2 US GDP growth will come in below the already tepid March quarter pace of 1.9%. With hours worked up modestly and average hourly earnings rising at around 2% incomes are also growing, but again at a relatively modest pace.
The good news in this result is that payroll gains seem to have settled at around the 70-80k level rather than pushing lower, which was our concern for this result. However, this rate of jobs growth, if continued, would be insufficient to make a meaningful dent in the unemployment rate.
The extent to which the recent slowdown in jobs growth is due to seasonal factors, a drop in confidence on the back of Europe concerns, or a genuine slowdown in economic growth will become clear over the next few months. At the same time that we are concerned about jobs growth, there is better news coming out of the housing market which is an important factor for stability and confidence, so its not all bad news at the moment. At this point our view remains that the US economy continues to grow, but at an unexciting pace.