Guest Post: Generation X: An Inconvenient Era
13 minutes ago
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Today's employment report is abysmal. We have had two months in a row of essentially no growth. Nonfarm payroll employment in June slowed to a crawl with an 18,000 gain, following a revised 25,000 rise in May, and revised 217,000 in April. The market median forecast was for a 105,000 boost. Also, the April and May revisions were down net 44,000. Once again, the government sector held down payroll numbers as private nonfarm payrolls outpaced the total with an increase of 57,000 in June, following a 73,000 advance in May. Analysts had projected a 125,000 gain in June.
Most major industries were little changed. Goods-producing jobs edged up 4,000, following a 3,000 rise in May. Manufacturing jobs rebounded 6,000 after a 2,000 dip in May. However, construction declined 9,000 after decreasing 4,000. Mining advanced 8,000, following 9,000 gain the prior month.
Growth in private service-providing jobs slowed to a rise of 53,000 after a 70,000 increase the prior month. Leading the increase in June was leisure & hospitality, up 34,000 with professional & technical services, up 24,000. Health care continued to trend upward with a 14,000 boost. On the downside, standouts were educational services, down 17,400; financial activities, down 15,000; and temp help, down 12,000.
The government sector shed another 39,000, following a 48,000 drop in May. This latest decrease was led by local government but declines were also seen at state and federal levels.
Average hourly earnings also slowed June, coming in at no change, following a 0.3 percent rise the prior month. The consensus forecast was for a 0.2 percent increase. The average workweek for all workers in June slipped to 34.3 hours from 34.4 the month before. The June figure came in lower than the market projection for 34.4 hours.
On a year-ago basis, overall payroll jobs in June improved to a still soft 0.8 percent from 0.6 percent the previous month.
From the household survey, the unemployment rate edged up to 9.2 percent from 9.1 percent in May. The consensus expected 9.0 percent.
The June jobs report reinvigorates the argument that the economy is in a soft patch. While a number of indicators have picked up strength, employment is key for the consumer sector to add to economic growth. On the news, equity futures dipped significantly, bond prices firmed, and crude oil declined.
Incremental improvement is the conclusion for weekly claims data, headlined by a 14,000 decline for initial claims in the July 2 week to 418,000. The improvement is offset slightly by an upward revision of 4,000 in the prior week to 432,000. Results for an unusually large number of six states had to be estimated due to the July 4 holiday while Minnesota shows a 2,500 rise related to the state's government shutdown. The four-week average is down 3,000 to 424,750 yet, over the last several weeks, shows little change from levels in June.
Continuing claims for the June 25 week fell 43,000 to 3.681 million. Continuing claims have been slowly trending lower with the four-week average of 3.705 million down about 20,000 from the month-ago comparison. The unemployment rate for insured workers is down one tenth to 2.9 percent.
Initial claims have been steady at a stubbornly high level above 400,000 which doesn't point to robust results for tomorrow's employment report. Yet this report is a slight positive for the economic outlook and also helps to confirm strength in today's ADP report.
Up 4.8 percent in the July 1 week, the purchase index ended a soft month on an up note. The gain came despite a big rise in mortgage rates that the Mortgage Bankers Association attributes to strong economic data late last week together with the end of QE2. Rates jumped in the week led by a 23 basis point rise in the average 30-year mortgage to 4.69 percent. Refinancing activity dipped sharply on the rise in rates with the refinancing index down 9.2 percent.
Layoff intentions remain subdued according to Challenger's count which comes in at 41,432 in June vs 37,135 in May and vs 39,358 in June last year. At 10,176, layoffs in June were heaviest in the government/non-profit category.