STEVE INSKEEP, HOST:
The job market accelerated last month. U.S. employers added a net 224,000 jobs in June. That is far more than many analysts were expecting and also a sharp improvement over a disappointing May.
NPR chief economic correspondent Scott Horsley is working on the job numbers, and he's here.
Good morning, Scott.
SCOTT HORSLEY, BYLINE: Good morning, Steve.
INSKEEP: Does this mean that May was just a blip?
HORSLEY: This is a reminder, Steve, of why we always say, don't put too much stock in any one month's datapoint. Watch for the larger...
INSKEEP: No pun intended on the stock thing there.
HORSLEY: That's right.
INSKEEP: Go on. Go on, please.
HORSLEY: Watch for the longer trend, you know? It's interesting. Actually, the number for May was actually revised even lower today, so it looks like there really was a slowdown in the month of May. But hiring bounced back strongly in June. So if we look at the longer trend, the average over the last three months is now about 171,000 jobs being added each month. That's roughly where we were at the beginning of the year, although it's still kind of a slowdown from the pace of hiring we saw at the end of 2018.
You would expect to see some slowdown in hiring at this late stage in what is now a record-long economic expansion, but it's looking more like a sort of gentle deceleration, rather than an economy that's slamming on the brakes.
INSKEEP: One-seventy-one per month on average, so pretty good - not amazing, but pretty good job growth. Unemployment, we should note, is now 3.7% - still fairly low. Where are the jobs being added?
HORSLEY: We saw a rebound in June in manufacturing and transportation. That's interesting because those are sectors that are especially sensitive to trade-related disruptions. Seventeen thousand new factory jobs were added last month, about 24,000 transportation and warehousing jobs. That shows some resilience, even with all the trade friction we've been going through. We should say the June report covers a week in the middle of June, so it's after the threat of tariffs on Mexico was relieved, but before this latest meeting between President Trump and Xi Jinping that dialed down tensions with China.
INSKEEP: Oh. A week, you're saying, because they take a slice of the month, and they survey that slice...
HORSLEY: The June number reflects a week in the middle of the month. That's right. We also saw some gains in government jobs last month. That may reflect the census. We saw big gains in health care. But we saw a decline, once again, in the retail sector.
INSKEEP: This is going to become a matter of some political discussion, so just give us your best estimate that you can. You said 17,000 new factory jobs amid the president's trade war and other things. People will be wondering, is there a way to draw a connection between higher tariffs and more manufacturing jobs? The president's theory has been more things will be made at home.
HORSLEY: Well, this follows, though, several months of flat or down jobs in the factory sector. So it's...
INSKEEP: Oh. So, again, we should look at the longer trend...
INSKEEP: ...And it doesn't look so great. Now, the president has been pushing the Federal Reserve to cut interest rates to rev up the economy. How does this affect his argument when we find out that the job market is not doing so badly?
HORSLEY: This is going to make the Fed's job a little trickier. Last month when the Fed gathered, they decided to hold off on lowering interest rates, even though they acknowledged there were some worrisome signs on the economic horizon. Officials said they wanted to see more data. The jobs report is one datapoint that they keep an eye on. They also watch inflation, all sorts of other clues. And not all those arrows are pointing in the same direction right now.
This arrow, though, is definitely saying the economy is in pretty good shape. That's going to weigh against a cut in interest rates when the Fed meets later this month. As a result, Steve, we could see one of those perverse reactions in the stock market to this very solid and encouraging jobs number. A month ago when we got a lousy jobs number, the stock market rallied because investors were betting, OK, now the Fed's going to cut interest rates. This very good jobs number may have the opposite effect. If investors decide, OK, now the Fed is going to be less likely to cut interest rates, we could actually see a drop in the stock market.
INSKEEP: And just to be really clear here, it sounds like the choice for the Fed right now is between leaving interest rates alone or cutting them. The idea of raising interest rates is not really on the table. The economy is not that strong at the moment.
INSKEEP: Scott, thanks very much for the update.
HORSLEY: You're welcome.
INSKEEP: That's NPR chief economics correspondent Scott Horsley. Transcript provided by NPR, Copyright NPR.