June Unemployment Report Review
The BLS announced the US economy created only 80,000 net new jobs in June. The seasonally adjusted number job is a large drop from the 12 month average of 150,000 since June 2011. The slow jobs growth is linked to weak demand both domestically and internationally, consumer debt overhang, lack of government spending and a soft housing market. The US GDP growth rate was reported at 1.9% on May 31st, 2012.
The household survey reported an additional 128,000 people working but the population grew by 189,000 so unemployment remained steady. The participation rate (63.8%), the EM rate (58.6%) and the unemployment rate (8.2%) did not move.
Economists and economic writers have now reset their expectations to about 100K or less jobs each month, so the 80K number was in line with new expectations.
The average work week rose a small part of an hour (0.1) to 34.5 and average hourly wages rose slightly ($0.06) to $23.50.
Below is the median weekly wage in constant (inflation adjusted) dollars.
Wages have been basically flat since 1980. The second chart is median wages since 2000 by race: Total, white, black and Hispanic/Latino.
There was a little good news in the report: the household survey said the number of people who self reported they were working increased by 128,000 on a seasonally adjusted basis. An additional 156,000 people came back into the labor market which kept the unemployment steady. Many unemployment people are losing their benefits in the coming months.
The black unemployment rate rose to 14.4%. The black labor force participation rate was 62.0 (68.4% for black men over 20 and 63.0% for black women over 20). The black teenage unemployment was reported at 39%. For comparison, the white unemployment rate stayed at 7.4% and the Hispanic rate stayed at 11.0%.
The long-term unemployed (27 weeks or more) stayed at 5.4 million people which represents 42% of the unemployed. The “work part-time, wants full-time” number was 8.2 million. These people are considered underemployed. About 2.5 million workers were classified as marginally attached to the labor force. They want work but have not looked in over four weeks. Finally, there were 821K discouraged workers (part of marginally attached) who are not looking because they believe there is no job for them.
As stated earlier, there were 80,000 jobs were added to the US economy in June. The private sector added 84,000 jobs (vs. adjusted 105,000 last month) and government employment dropped again by -4,000. Job growth came from increases in durable goods manufacturing, temp help, leisure and hospitality, computer information systems and business consulting. The losers were construction (-7K) and retail trade (-5K).
Manufacturing added 11,000 positions; Construction added 2, 000 jobs; business services was up 47,000 jobs and healthcare added only 11,000 new positions. US manufacturing continues to impress with solid gains (+500,000) from the bottom of the recession.
Total government employment drop by -4,000: the federal government lost 7,000 employees and the state governments lost 1,000 people while local employment was up 4,000. Since the recession started in December, 2007 the government has lost 433,000 jobs. The private sector has added 4.3 million jobs since December 2009.
Basically the lack of government hiring is slowing the economy. If government hiring continued at the same rate as private sector hiring and additional XXX,XXX jobs would have been created.
One controversial aspect of the report is how the BLS handles seasonal adjustments. The household survey has reported an average of 500,000 new jobs each month since January on an unadjusted basis, yet the seasonally adjusted number shows only 150,000 new jobs on average. The seasonally adjusted number shows much lower employment growth. The establishment survey reported similar results. Since January, in the business establishment survey, there were about 460,000 non-seasonally adjusted new jobs on average. But the adjusted establishment numbers since January come in at an average of 150,000.
Average work week increased by 0.1 hours to 34.5 hours and wages added 6 cent in June.
ADP reported an increase in private payrolls of 176,000 positions.
Monster Employment Index moved up to 153 in June from 147 in May. Hiring was up 5% compared to same month last year.
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