Job Gains Take a Step Back and Unemployment Rates Pick Up Across States
Source: Economics Group of Wells Fargo Bank, N.A.
Summary
State Labor Markets Deteriorating, but Not Everywhere
- Payroll growth took a step back at the state level. In July, 28 states added payrolls, the lowest share in a year. Meanwhile, the number of states with higher-moving unemployment rates picked up from 18 in June to 28 in July.
- Not all states exhibited the same labor market deterioration, however. New York’s 41K payroll gain in July was the strongest in the nation and the best outcome for the state since January 2023. The next two highest gainers, California and Florida, also saw payroll growth accelerate above 20K.
- Twenty-two states shed payrolls over the month. Missouri lost the greatest number of jobs, 22.4K. Texas and New Jersey followed closely behind with more than 10K jobs lost each.
- As noted in our most recent employment record, the unemployment rate moved high enough at the national level to violate the Sahm Rule in July. Yet, unemployment rate increases this cycle have been driven more heavily by labor force entrants than in cycles past. This nuance helps to explain why our state-based recession indicator has breached the threshold signaling recession twice over the past two years without a downturn materializing.