Tuesday, July 6, 2010

June Employment Report- "Economists React: Is Economy Deer in Headlights or Roadkill?"

From the Wall Street Journal's Real Time Economics blog:
Economists and others weigh in on the June employment report.
There was a solid improving trend in place through April, but the labor market downshifted to a tepid footing in May and June. The anecdotal and survey indicators still for the most part suggest that we should be doing better. I take yesterday’s ISM and today’s employment data as providing hard evidence that the uncertainty and caution enveloping the markets since the beginning of May, unfortunately a key import from Europe, have had a real impact on the economy. The question at this point now becomes whether the economy is a deer in the headlights (frozen in fear momentarily but with strong underlying fundamentals still largely in place) or roadkill. I still see a full-blown double dip as a remote possibility at this point. Instead, I would look for a period of slower growth. –Stephen Stanley, Pierpoint Securities

This was about as middle ground a report as you can get. As expected, the cut backs in Census workers led to a large decline in overall payrolls. But the more important number is the private sector jobs and that came in about where expected. That is, businesses added workers but not at a spectacular rate and clearly not fast enough to keep the unemployment rate declining, which it did. –Naroff Economic Advisors
The sector breakdown suggests that there had been some substitution away from the private sector and into temporary Census jobs in recent months. For example, leisure and hospitality (an area that may naturally compete for the same short-term hires) jumped by 37,000 in June, having fallen by 7,000 in May. Weakness in the private sector was centered in construction (-22,000) and a slowdown in manufacturing hires, to 9,000 from 32,000 in May and 38,000 in April. While private sectoring hiring remains subdued, the rebound from May is an encouraging sign, and we expect private sector payrolls to rise further in the coming months. –Peter Newland, Barclays Capital

Also at RTE:
Why Did the Unemployment Rate Drop?