Foodservice Equipment Reports

Top-Line Jobs Growth Muddied By Flat Wages And Participation Drop In June

Nonfarm payroll employment grew by 223,000 jobs in June and the unemployment rate fell to 5.3%, but the average workweek and hourly earnings were flat, dampening many analysts’ enthusiasm about the report. A drop in the labor-force participation rate, which helped push the decline in the unemployment rate, also led some to question whether the Federal Reserve will finally begin raising interest rates from near zero in September, as many had expected.

The top-line jobs growth of 223,000 was ahead of the monthly 205,000 average since the beginning of the year, including downward revisions to the April and May numbers by 60,000. The gains were centered in the services sectors, including healthcare, professional and business services, retail and leisure and hospitality. Eating and drinking places added 29,900 jobs on a seasonally adjusted basis. (See article this issue.)

But there was almost no growth in the generally higher-wage goods-producing sectors. Construction added no jobs and manufacturing only 4,000.

The flat wages and hours reversed a recent trend of some gains in those measures after years of stagnant growth in real incomes and set the Fed watchers to begin questioning whether the long-anticipated rise in interest rates is imminent. The experts have begun discussing what so-called “full employment” looks like in a U.S. labor market that is undergoing significant structural change. Those who study consumer confidence and its effect on spending behavior are asking similar questions.

Still, the overall employment trends continue to bode well for growth in foodservice sales. Few factors drive growth in sales more than positive employment trends. Coupled with dramatically lower gasoline prices, most operators are experiencing a very good year on the top line so far.