Unemployment continues to rise, while more jobseekers enter the workforce and overall job growth slows

The takeaway: Confidence in Ohio’s job market signaled by consistent growth in the labor force, coupled with falling inflation, offer a positive outlook for Ohio’s economy. However, Ohio’s job gains have not kept pace with number of Ohioans entering the labor force, resulting in rising unemployment. With inflation down 0.1 points from May to 2.9% in June, it’s time for the Fed to lower interest rates to accelerate slowing job growth in Ohio.

The numbers: Seasonally adjusted data released today by the Ohio Department of Job and Family Services (ODJFS) show that Ohio gained 2,200 jobs last month, from an upwardly revised 5,667,500 in June to 5,669,700 in July. Monthly numbers are preliminary and subject to revision. June’s revision shows an increase of 12,300 jobs from May to June, reinforcing the upward trend we’ve been observing: As of July 2024, Ohio has added nearly 40,000 jobs this year. However, after strong job growth from April to June (+26,100), July’s gains indicate the upward trend may be slowing.

“Inflation is at a three-year low, a positive indicator for impending interest rate cuts in September,” said Molly Bryden, researcher with Policy Matters Ohio. “Despite the large increase in jobs this year, job growth is beginning to slow. The Fed’s timeline for cutting interest rates is critical for addressing the weakening job market in a timely manner – waiting too long could have significant implications for Ohio’s economy.”

The details: Goods producers added the most jobs this month (+2,300), driven by the addition of 2,300 jobs in the construction industry. Modest gains in manufacturing jobs (+100) were cancelled out by an equal reduction in mining and logging jobs. Notably, durable goods manufacturers saw a loss of 1,100 jobs, offset by gains in nondurable goods manufacturing (+1,200). Service providers followed with an overall increase of 1,100 new jobs, with the largest gains in educational and health services (+2,800), and the greatest losses in professional and business services (-2,800). Public sector jobs are down from last month (-1,200), with the largest job losses in local government (-1,700), followed by a small drop in federal government jobs (-100) and slightly moderated by the 600 new jobs in state government.

“Construction jobs continue to rise, after unusual losses in April. At the same time, durable goods manufacturing jobs have been trending down since April, likely in response to dwindling consumer demand,” said Bryden. “Nationwide, production has been down for several industries, including industries with strong presence in Ohio, like primary metals, plastics and rubber products, and machinery. Demand for durable goods – long-lasting products like vehicles or home appliances – is an important economic indicator. Fewer jobs in durable goods production and slowing job growth overall may signal worsening economic conditions for Ohio.”

The household survey: The separate household survey showed that the number of Ohioans unemployed reached 264,000 in July, up 10,000 from last month. 12,000 Ohioans gained jobs, and 22,000 Ohioans entered the workforce to seek jobs. Ohio’s labor force has seen substantial growth, as July marks the largest rise in job-seeking Ohioans entering the workforce this year, closely followed by June’s growth (+21,000). The unemployment rate rose 0.1 points to 4.5%. The nation’s unemployment rate was 4.3%.

Job growth has not kept pace with Ohio’s expanding labor force, leading to rising unemployment levels. Experts share concern that the Federal Reserve has already waited too long to cut interest rates. Although the growing labor force indicates jobseekers’ optimism, without timely intervention from the Fed, that confidence may falter. Despite uncertainty around the Fed’s plans for reducing interest rates, Ohio has seen steady job growth this year, and record-low inflation rates are a positive sign – as long as the Fed takes action to lower interest rates and bolster the resilience of Ohio’s job market.

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