Friday, July 8, 2011

"Economists React: Jobs Report an ‘Unmitigated Disaster’"

The WSJ's Real Time Economics does the legwork:
By Phil Izzo
Economists and others weigh in on the tepid rise in payrolls amid a increase in the unemployment rate.

Overall the June Employment Report was quite disappointing , with basically no positive offsets to the poor headline results. The best we can say is that other data have shown better signs in recent weeks, including jobless claims, chain-store sales, gasoline prices, and auto production. Nevertheless, the weak trend in payroll employment indicates some downside risk to our second half growth views. –Goldman Sachs

Ugly. I mean really ugly., The June employment data were stunningly weak. Job gains were the lowest since last September when payrolls declined. Given the measurement error, you cannot even say that any new hiring occurred in June. Worse, the April and May gains were revised downward indicating that smaller businesses are not out there hiring either. That is consistent with the surveys coming out of the National Federation of Independent Business and is a discouraging trend since that is where most of the hiring occurs. Interestingly, there were almost no sectors that showed any strong gains but only a few industries cut sharply. –Naroff Economic Advisors

Nonfarm establishments added a scant 18,000 workers to their payrolls in June with private sector firms adding 57,000 while governments cut staff by 39,000. As if these markedly weaker than expected news isn’t enough, the weak May data were revised down. The exception to the overarching gloom in the headline numbers was the manufacturing sector, which added 6,000 workers after cutting payrolls by less in May than previously reported. Weakness permeated most industries including private sector education, which fell 17,000, the biggest cutback in nearly two years. Apart from manufacturing, two industries — leisure and hospitality and retail — behaved roughly as expected reversing some or all of the May declines. –David Resler, Nomura Global Economics

The unemployment rate rose for the third month in a row to 9.2% in June from 9.1% in May – up [0.4 percentage point] in three months and the highest since November 2010. Clearly, the large drop in the unemployment rate heading into the year was overdone. Moreover, the details behind the rise in the unemployment rate were poor. Household employment fell 445,000 in June, the biggest one-month decline since December 2009. –Ethan Harris, Bank of America Merrill Lynch