Headline Unemployment Rate Falls For All The Wrong Reasons
The headline unemployment rate (U3) fell to 9.5% in June, mostly because of a massive exodus of job seekers from the official labor force, as they gave up looking. Meanwhile, in a potentially bad omen heading into July, both the average workweek and average hourly earnings slipped in June.
Econoday.com
Released on 7/2/2010 8:30:00 AM For Jun, 2010 PriorConsensusConsensus RangeActual Nonfarm Payrolls - M/M change431,000 -125,000 -200,000 to 0 -125,000 Private Payrolls - M/M change41,000 105,000 50,000 to 200,000 83,000 Unemployment Rate - Level9.7 %9.8 %9.6 % to 9.9 %9.5 %Average Hourly Earnings - M/M change0.3 %0.1 %0.1 % to 0.2 %-0.1 %Av Workweek - All Employees34.2 hrs34.2 hrs34.2 hrs to 34.3 hrs34.1 hrs Highlights
The jobs picture in June was quite mixed as temporary Census workers were laid off and private hiring was positive but moderate. Also, the unemployment rate continued to dip even as the workweek slipped. Overall payroll jobs in June fell back 125,000 after spiking a revised 433,000 in May and after a 313,000 jump in April. The June decrease was matched the market forecast for a 125,000 decline.
Looking beyond the temporary effects of Census hiring and firing, private nonfarm employment increased 83,000, following a 33,000 rise in May. The latest figure fell short of analysts' projection for a 105,000 advance in private payrolls.
The private sector gain was led by a 91,000 boost in private service-providing jobs. This included professional & business services, up 46,000, and leisure & hospitality, up 37,000. The goods-producing sector lost a net 8,000 payrolls with construction down 22,000. Manufacturing posted a 9,000 gain while mining & logging advanced 5,000. Manufacturing has risen three months in a row.
The big weakness, of course, was a 208,000 drop in government jobs after a 400,000 jump in May. The decline included the loss of 225,000 temporary employees working on Census 2010. Employment in both state and local governments was little changed over the month.
On a year-ago basis, overall payroll jobs improved to down 0.1 percent in June from down 0.4 percent the prior month.
There other signs of a slowing in the labor market. Growth in average hourly earnings eased to a 0.1 percent decline, following a 0.2 percent boost in May. The average workweek for all workers edged down to 34.1 hours compared to 34.2 hours in May. The market forecast was for 34.2 hours.
The good news at face value in the June report was that the unemployment rate to 9.5 percent in June from 9.7 percent in May. However, the decrease was due to a sharp drop in the labor force.
Calculated Risk
Percent Job Losses During Recessions, aligned at Bottom
Click on graph for larger image.
This graph shows the job losses from the start of the employment recession, in percentage terms - but this time aligned at the bottom of the recession.
The current recession bounced along the bottom for a few months - so the choice of bottom is a little arbitrary (plus or minus a month or two).
The dotted line shows the impact of Census hiring. In May, there were 339,000 temporary 2010 Census workers on the payroll. The number of Census workers will continue to decline - and the gap between the solid and dashed red lines will be mostly closed in three or four months.
Employment-Population Ratio
The Employment-Population ratio decreased to 58.5% in June from 58.7% in May. This had been increasing after plunging since the start of the recession, and the recovery in the Employment-Population ratio was considered a good sign - but the ratio has now decreased for two consecutive months.
This graph shows the employment-population ratio; this is the ratio of employed Americans to the adult population.
Note: the graph doesn't start at zero to better show the change.
The Labor Force Participation Rate decreased to 64.7% from 65.0% in May. This is the percentage of the working age population in the labor force. This decline is very disappointing, and the rate is well below the 66% to 67% rate that was normal over the last 20 years.
The reason the unemployment rate declined was because people left the workforce - and that is not good news.
Econoday.com
Released on 7/2/2010 8:30:00 AM For Jun, 2010 PriorConsensusConsensus RangeActual Nonfarm Payrolls - M/M change431,000 -125,000 -200,000 to 0 -125,000 Private Payrolls - M/M change41,000 105,000 50,000 to 200,000 83,000 Unemployment Rate - Level9.7 %9.8 %9.6 % to 9.9 %9.5 %Average Hourly Earnings - M/M change0.3 %0.1 %0.1 % to 0.2 %-0.1 %Av Workweek - All Employees34.2 hrs34.2 hrs34.2 hrs to 34.3 hrs34.1 hrs Highlights
The jobs picture in June was quite mixed as temporary Census workers were laid off and private hiring was positive but moderate. Also, the unemployment rate continued to dip even as the workweek slipped. Overall payroll jobs in June fell back 125,000 after spiking a revised 433,000 in May and after a 313,000 jump in April. The June decrease was matched the market forecast for a 125,000 decline.
Looking beyond the temporary effects of Census hiring and firing, private nonfarm employment increased 83,000, following a 33,000 rise in May. The latest figure fell short of analysts' projection for a 105,000 advance in private payrolls.
The private sector gain was led by a 91,000 boost in private service-providing jobs. This included professional & business services, up 46,000, and leisure & hospitality, up 37,000. The goods-producing sector lost a net 8,000 payrolls with construction down 22,000. Manufacturing posted a 9,000 gain while mining & logging advanced 5,000. Manufacturing has risen three months in a row.
The big weakness, of course, was a 208,000 drop in government jobs after a 400,000 jump in May. The decline included the loss of 225,000 temporary employees working on Census 2010. Employment in both state and local governments was little changed over the month.
On a year-ago basis, overall payroll jobs improved to down 0.1 percent in June from down 0.4 percent the prior month.
There other signs of a slowing in the labor market. Growth in average hourly earnings eased to a 0.1 percent decline, following a 0.2 percent boost in May. The average workweek for all workers edged down to 34.1 hours compared to 34.2 hours in May. The market forecast was for 34.2 hours.
The good news at face value in the June report was that the unemployment rate to 9.5 percent in June from 9.7 percent in May. However, the decrease was due to a sharp drop in the labor force.
Calculated Risk
Percent Job Losses During Recessions, aligned at Bottom
Click on graph for larger image.
This graph shows the job losses from the start of the employment recession, in percentage terms - but this time aligned at the bottom of the recession.
The current recession bounced along the bottom for a few months - so the choice of bottom is a little arbitrary (plus or minus a month or two).
The dotted line shows the impact of Census hiring. In May, there were 339,000 temporary 2010 Census workers on the payroll. The number of Census workers will continue to decline - and the gap between the solid and dashed red lines will be mostly closed in three or four months.
Employment-Population Ratio
The Employment-Population ratio decreased to 58.5% in June from 58.7% in May. This had been increasing after plunging since the start of the recession, and the recovery in the Employment-Population ratio was considered a good sign - but the ratio has now decreased for two consecutive months.
This graph shows the employment-population ratio; this is the ratio of employed Americans to the adult population.
Note: the graph doesn't start at zero to better show the change.
The Labor Force Participation Rate decreased to 64.7% from 65.0% in May. This is the percentage of the working age population in the labor force. This decline is very disappointing, and the rate is well below the 66% to 67% rate that was normal over the last 20 years.
The reason the unemployment rate declined was because people left the workforce - and that is not good news.