June's Employment Data Badly Disappoints - July 8, 2011
Just when it seemed as though the economic news might finally be starting to get better, the U.S. Labor Department brought us back to reality earlier this morning. That is because just one day after Automatic Data Processing (ADP), the financial services giant, reported that the nation added 157,000 private-sector jobs in June, more than double the 68,000 increase widely forecast, and the U.S. Labor Department reported that jobless claims had fallen by 18,000 in the latest week, more than five times the expected nominal decline, that same government agency announced that the employment sector had fallen flat on its face last month.
That is because instead of adding the 90,000 to 100,000 jobs as had been generally expected, the nation created just 18,000 new positions last month. Also, the jobless rate, widely expected to have stayed the same in June, rose, instead, by one-tenth of a percentage point, going from 9.1% to 9.2%.
Let's now look at some of the details of that closely watched monthly survey. In addition to the 18,000 jobs added last month, the figures for April and May were revised downward. Specifically, the April payroll gain was pared back from an estimate of 232,000 to one of 217,000; and the May increase was reduced from 54,000 to just 25,000. The paltry 18,000 gain in June payrolls thus made it two months in a row that the nation's non-farm payrolls had barely risen. That is not a positive sign for economic improvement of note in the second half of this year. It is also a discouraging metric for the beleaguered housing industry, which we feel will not get off the ground until Americans start to get more positive in their employment outlook. The June employment figures will not increase their optimism, that is for certain.
Breaking down the latest monthly employment survey, we find that non-farm payrolls, which averaged monthly gains of 215,000 from February to April, have essentially been flat the past two months, averaging increases of 21,500, or just 10% of the prior three-month total. As for a sector-by-sector job breakdown, it was clearly not impressive. For example, professional and business services added 24,000 jobs last month, while health care jobs increased by 14,000 in June. Also rising were positions in mining (up 8,000 last month) and in the leisure and hospitality area (up 34,000). On the other hand, government jobs continued to dry up, with a decline last month of 39,000, overall, 14,000 of which took place at the federal level. Budget problems are obviously playing a role at the federal, state, and local levels.
Also worrisome was the fact that manufacturing jobs, which have been rising for a number of months, were essentially unchanged last month. Such employment had surged by 164,000 jobs between November of 2010 and April of this year.
Also troubling was the fact that the average workweek fell by 0.1 hour, to 34.3 hours per week. That metric has been generally increasing. The manufacturing workweek, meanwhile, fell by 0.3 hour, to just over 40 hours per week. Also, in June, average hourly earnings decreased by a penny, to $22.99. Over the past 12 months, average hourly earnings have been up by 1.9%. Clearly, there was nothing uplifting in the jobs report, especially after hopes had risen markedly in the past 24 hours on the heels of the ADP and jobless claims data.
Finally, the unemployment rate of 9.2% was, as noted, an increase from May's 9.1% rate and from April's 9.0% level of joblessness. About the only positive development is that the unemployment rate is still modestly below the 9.5% rate recorded in June of 2010. However, that is pretty meager improvement as the nation is now a year further along on its current uninspiring economic road to recovery.
At the time of this article’s writing, the author did not have any positions in any of the companies mentioned.