- Job growth in June slowed more than expected.
- Jobless claims rose, but the unemployment rate declined.
- June auto sales were up 20% from a year ago, the highest since May 2021.
The June employment report reflected a labor market finally starting to show signs of weakening, as June saw fewer jobs created than had been expected. Still, the unemployment rate declined to 3.6% and remains very low. Only two major industry sectors lost jobs in June. Average hourly earnings growth also remains strong.
This is likely not enough to change the Fed’s plans to increase rates by a quarter point later in July, but we get another round of inflation data next week.
June auto sales came in surprisingly strong, 20% above a year ago, to the highest since May 2021.
Job Growth in June Slowed More Than Expected
Job growth in June slowed more than expected, and prior job numbers were revised down, but the unemployment rate declined. June saw 209,000 jobs created when 230,000 had been expected. The last two monthly numbers were revised down for a net decline of 110,000 fewer jobs than originally estimated.
As a result, June strongly signaled that the Fed’s efforts to slow the economy and, specifically, the strong labor market are bearing fruit.
Still, most major employment sectors saw job gains in June, but the gains were more contained. Education and Health Services again had the largest increase. Mining and Logging and Trade, Transportation, and Utilities had losses. The services sector collectively added 120,000 jobs, down from 236,000 in May. Auto dealers added 3500 jobs in June, which left employment at dealers down 51,700 or 3.9% below the February 2020 level. Total payrolls now exceed February 2020 payrolls by 3.8 million or 2.5%
June’s Unemployment Rate Declined
The headline unemployment rate declined to 3.6% from 3.7% in May, the highest level since last October.
The labor force participation rate was steady at 62.6%. Participation is down 0.7 percentage points from February 2020 and represents 1.9 million fewer people in the labor force compared to February 2020 despite adding 3.8 million jobs.
The underemployment rate, the broadest measure of unemployment, increased to 6.9% from 6.7% in May and the highest level since August 2022.
Monthly average hourly earnings growth was steady at 0.4% as May’s earnings growth was upwardly revised. Earnings growth year-over-year was also steady at 4.4% from an upwardly revised May.
Jobless Claims Are Rising
Initial jobless claims are increasing, are higher year-over-year, and are higher than before the pandemic began. Continuing claims, representing people who previously filed and remain on traditional unemployment compensation, have changed little over the last month and remain below what they were before the pandemic.
The labor market is not as strong as a year ago, but the metrics are varied and do not indicate major deterioration or signs of significant stress emerging. Moreover, jobless claims remain at historically low levels relative to the job base.
June Auto Sales Rose 20% From a Year Ago, the Highest Since May 2021
New-vehicle sales by volume were the highest in June since May 2021. Sales into fleet and increasing incentives contributed to the 20% year-over-year volume gain. Compared with May, new-vehicle sales were up 0.5% in June. The June SAAR was 15.7 million, which was a 20% increase from last year’s 13.0 million and up 4% from May’s 15.1 million.
The strength in June was again supported by strong sales growth into fleet. Combined sales into large rental, commercial, and government fleets were up 45% from a year ago. Sales into large rental fleets were up 85% from a year ago, while sales into commercial fleets were up 15%, and sales into government fleets were up 41%.
Including an estimate for fleet deliveries into dealer and manufacturer channels, the remaining retail sales were estimated to be up 16.9%, leading to an estimated retail SAAR of 12.4 million, up 1.3 million from last year’s pace but down 0.3 million from last month’s pace. The fleet share of 17.4% was a 2.1% gain compared to last year’s share of 15.3% and was a 1.1% increase from last month’s 16.3% share.
The average transaction price of a new vehicle in June was up 0.3% from May at an initial estimate of $48,808, and the average price gained a little ground but remained below the average MSRP. The average price was up 1.6% from a year ago, while the average MSRP increased 0.3% in June from May and was up 3.8% year-over-year.
The average incentive spending from manufacturers increased 5.2% to $2,048, up 85% from a year ago. Incentives as a percentage of average transaction price increased to 4.2%, the highest level since October 2021. Pricing power has declined but remains strong relative to pre-pandemic comparisons.
Jonathan Smoke leads Cox Automotive’s economic and industry insights team, which tracks key metrics and trends impacting both the wholesale and retail markets for vehicles informed by the proprietary data from the company’s businesses and platforms. For 28 years, Smoke has focused on translating data and trends into relevant actionable insights for the industries that represent the biggest purchases that consumers make in their lifetimes: real estate and automotive. Smoke joined Cox Automotive in 2017.