From a high level, the last jobs report was a knockout. But within it were some warning signs for President Donald Trump and the Republican Party going into next year’s midterm elections. The headline was a gain of 147,000 payrolls in June that exceeded all but one estimate in a Bloomberg survey of economists. But digging deeper into the data, released just ahead of the July Fourth holiday, revealed that the gains mostly came from a jump in jobs in education, which could be a passing blip. And the unexpected drop in the unemployment rate partly reflected more people simply leaving the workforce. Outside of education, job growth was hard to find. Manufacturers cut jobs for a second straight month, including a slight decline at automakers. Payrolls at wholesale trade companies dropped by the most in more than a year — suggesting these industries may be feeling the initial impact from Trump’s tariffs. The administration argues that its policies aimed at bolstering domestic production will lead to stronger job growth in the long run. While the midterm elections are still more than a year in the distance, the underlying data of the report indicate the slowdown in the labor market is well underway, and pillars of strength are fading. The immigrant workforce, which had been one of the biggest drivers of job growth in recent years, has been shrinking for the past three months as the administration ramps up border enforcement and deportations. The broad-based hiring seen late last year is beginning to wither away, with the so-called diffusion index indicating that less than half of US industries increased employment in June. Economists say the figures are consistent with expectations for the job market to continue cooling gradually. A more marked deterioration would create an even bigger risk for Republicans when voting begins in elections that will determine which party controls Congress. — Molly Smith |