Employment figures for June disappointed with a gain of only 57,000. One month’s figure—good or bad—is, however, little better than meaningless. Reading much into it is only slightly better than getting excited over the next figure produced by a random number generator. Trends show over several months, and on this score, it looks as though the nation, after almost 24 months of disappointing jobs figures, is enjoying a general hiring pickup. Along with upbeat signs from capital goods orders and new business formation, it is not unreasonable to conclude that business confidence has regained strength and that means something positive for the country’s overall economic prospects.
A Turnaround in Hiring After Two Sluggish Years
Even including June’s disappointing report, the turn on the jobs front is really quite remarkable. To be sure, the path of hiring has ridden something of a rollercoaster for some time now. Emerging from the lockdowns and quarantines of Covid, the nation experienced a great surge in hiring. Then beginning in spring of 2024, all this good news seemed to end abruptly. From April of that year until just recently, payroll expansions averaged well under 100,000 a month. The unemployment rate rose only slightly because the work force hardly grew, which itself is hardly a sign of confidence among the working-aged population. But in March this year, employers reported a payroll expansion of over 200,000. That looked like a statistical fluke until figures for April and May became available. These months showed employment gains of 148,000 and 129,000 respectively. That is over half a million more Americans at work over the course of only four months, no small figure even in a country as large as this one.
Why the Immigration Explanation for Weak Hiring Falls Short
Economists questioned by media outlets explained the earlier poor jobs numbers in terms of immigration. They argued that the slowdown in border crossings late in the Biden administration and certainly in the Trump administration constrained the labor market and hiring. Though on the surface, such reasoning sounds plausible, this immigration argument on reflection looks weak. Since most of the immigration was illegal, and illegals, as well as their employers, tend to shy away from government reporting, even to agencies just collecting data, neither the earlier surge in border crossing under most of Biden’s term nor the slowdown that followed would seem to have had much to do with the reported hiring figures. Rather than these popular explanations, a better line of reasoning would recognize that the uncertainties attached to a possible victory for the hyperactive President Trump and then its reality kept business on edge. By this spring, however, the administration’s directions and priorities became clearer, giving businesses a better view of the future and the confidence to again step up hiring.
Hiring Gains Now Span a Broad Range of Industries
Of course, four months is just a beginning, but there are other signs of improved confidence and the prospects it could bring. For one, this hiring strength has occurred across many industries. Through much of 2024 and all of 2025, most of the hiring, if it occurred much at all, was in healthcare. It is not that there is anything wrong with healthcare, but such concentrated hiring would seem to speak more to the correction of an imbalance than to a general economic trend. In contrast, the hiring strength since spring appears in construction; durable goods manufacturing, such as materials, machinery and appliances; education; retail trade; transportation; and business services.
Falling Unemployment and Rising Hours Point to Real Labor Demand
It encourages further that the absolute number of unemployed people in the country has actually shrunk over this four-month stretch. The drop is almost 10% from unemployment’s high last November and speaks to a picture of an economy that is relieving a backlog of jobseekers that had previously built up. In this regard, it is also noteworthy that the average hours worked by each employee has also risen from the lows of last October. The rise, to be sure, is only slight, but it does point to a developing need for additional hires.
News from outside labor markets reinforces this picture of improving business confidence. Two items in particular stand out. Since this year began, new orders of capital goods by businesses have picked up smartly. Between February and May, the most recent month for which data are available, orders for machinery and other productive equipment (excluding defense material and aircraft) have risen at an almost 20% annualized rate. This kind of financial commitment implicit in these orders certainly speaks to an improved sense of the business environment, at least among business decision makers. The same can be said about the Commerce Department report that applications to start a new business rose 3.7% from April to May and stood about 25% above year-ago levels.
If one must admit that the future, as always, remains uncertain, and especially so today with the fighting in the Persian Gulf and the hyperactive Trump administration. It is nonetheless possible to conclude that growth indicators have improved as have the nation’s economic prospects.
