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Job Market Improving, But Still Has Further to Go

Markets got a boost last week from a strong June jobs report, sending the general unemployment rate to 6.1% – the lowest level since September, 2008 and very close to its 20 year average of 6%. However, this measure of unemployment, which simply counts the total amount of unemployed workers, is just one important measure of unemployment. The Bureau of Labor statistics releases no less than six different measures every month, each providing a different way to understand the U.S. labor situation. Another important rate the U-6 rate factors in those who are working part time but want full time work and those that are not looking for work now, but have in the last year. This broader rate of unemployment is significantly higher, at 12.1%. Encouragingly, this rate has also come down substantially from its peak of 17.2% in 2010. However, todays rate is almost 1.5% higher than the 20 year average of 10.7%.

unemployment7.14Additionally, many of the new jobs have been in low wage areas like retail and hospitality. This trend of lower paying jobs, combined with increasing food prices, is a concern for the well-being of American workers. Nevertheless, these concerns are doing little to dampen stock prices, with second quarter earnings of S&P 500 companies predicted to rise close to 5%. While employment has room for improvement, a trend of more Americans employed at some level, combined with earnings growth, is a positive for U.S. stocks.

DISCLAIMER: Past performance does not predict future results. This report is based on data obtained from sources we believe to be reliable. Hefren-Tillotson does not, nor any other party, guarantee the accuracy or completeness of this report or make any warranties regarding results obtained from its usage. All opinions and estimates included in this report constitute the firms judgment as of the date of this report and are subject to change without notice. This report is for informational purposes only and is not intended as an offer or solicitation to buy or sell the securities herein mentioned.

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