NON FARM PAYROLL

NON FARM PAYROLL
U.S. employers trimmed jobs from their payrolls in June for the sixth consecutive month, showing continued—albeit relatively mild—weakness in the labor market. Thus far, job losses are still at a rate soft enough to not pull the overall economy into recession. The Labor Department reported a net loss of 62,000 jobs in June, matching the job loss figure for May, which was revised higher from 49,000. The decline in June employment was slightly worse than the consensus forecast for a 60,000 decline, and brought the number of jobs lost by the U.S. economy so far this year to 438,000.
Several key factors are thought to have influenced the July NFP report. They include:
- An increase in the unemployment rate to 5.5%, matching the May level and consensus expectations.
- The decline of 49,000 (0.04%) in NFPs continues a trend of small declines in payrolls consistent with GDP growth near 1.5%.
- Hourly earnings bounced back to a 0.3% gain after a 0.1% increase in April.
- The four-week moving average for unemployment insurance initial claims neared the worrisome 400,000 benchmark, reaching 390,500—the highest level since the four weeks following 2005's Hurricane Katrina.
For week ending July 19, the Labor Department reported that the advance figure for seasonally adjusted initial claims was 406,000, an increase of 34,000 from the previous week's revised figure of 372,000. They also reported a four-week moving average of 382,500, an increase of 4,500 from the previous week's revised average of 378,000.
While the sequence of negative payroll numbers is certainly not good news for consumers, its relatively soft pace should be kept in perspective. Even incremental gains in economic productivity will keep overall growth slightly positive. While the economic picture isn't necessarily inspiring, neither is it cause for panic. Watch for slow growth ahead.