US Jobs Slipping Away?

Via Pension Pulse.

Lucia
Mutikani of Reuters reports, Weak
private hiring in June shows tepid U.S. recovery:

U.S. private payrolls rose only modestly in
June and overall employment fell for the first time this year as
thousands of temporary census jobs ended, indicating the economic
recovery is failing to pick up steam.

The employment figures from the U.S. Labor
Department on Friday followed a raft of weak reports this week on
consumer spending, housing and factory activity that have heightened
fears the economy could slip back into a recession.

But even though private-sector hiring in
June was well below levels needed to bring down unemployment on a
sustained basis, analysts said the figures were not consistent with an
economy on the brink of another recession.

"We
are still on track for a fairly moderate recovery," said Julia
Coronado, an economist at BNP Paribas in New York. "There have been some
concerns that maybe we are heading for a double-dip. The report eases
those concerns in the sense that we are still creating private sector
jobs."

Private
hiring rose by 83,000 after adding only 33,000 jobs in May. Total
nonfarm employment actually dropped 125,000 -- the largest decline
since October -- as the government laid off 225,000 temporary census
workers.

The unemployment rate fell
to 9.5 percent, the lowest level since July 2009, from 9.7 percent in
May, but only because a flood of jobless workers gave up their
employment search.

President Barack
Obama, whose approval ratings have been battered by the weak economy,
expressed disappointment in the numbers even though he said they showed
the recovery moving forward.

"We're
not headed there fast enough for a lot of Americans," he said at
Andrews Air Force Base in Maryland. "We're not headed there fast enough
for me, either."

Economists polled by Reuters had expected
private employment to grow by 112,000 jobs, although some had scaled
back their projections in recent days. The jobless rate was expected to
edge up to 9.8 percent.

U.S. stock
indexes closed down for a fifth straight day. Prices for government
debt slipped as bond investors, who had driven a rally in recent days,
focused on the report not being as bad as had been feared. The U.S.
dollar fell against the euro.

EUROPEAN
DEBT CRISIS BLAMED

Also on
Friday, the Commerce Department said that factory orders in May suffered
their biggest tumble since March of last year.

Analysts blamed the moderation in the
recovery from the longest and deepest recession since the 1930s on the
sovereign debt crisis in Europe, which is expected to stunt growth in
the region as governments tighten belts to cut budget deficits.

"The European debt crisis is having a
negative impact on consumer and business confidence," said Chris Rupkey,
chief economist at Bank of Tokyo-Mitsubishi UFJ in New York. "I don't
think the outlook for the second half is that negative, but the jury is
out on this until we see next month's jobs report."

A poor labor market in an election year is
the worst nightmare for Obama and could cost the Democratic Party
dearly in November mid-term elections.

Obama,
who has called job creation his No. 1 priority, has tried to put the
blame on the policies of the previous administration. But Republicans
say a roughly $800 billion package of tax cuts and spending pushed by
Obama has not worked.

"The writing
is on the wall for President Obama's stimulus policies and everyone --
taxpayers, economists, and the rest of the world -- sees it but him,"
said House Republican Leader John Boehner.

With
the economy still in a fragile state, the Federal Reserve is also in a
bind. It has held benchmark overnight interest rates close to zero
since December 2008 and has pumped more than $1 trillion into the
economy.

Fed
officials believe a sustainable recovery has taken hold, but are
watching cautiously and financial markets do not expect the central
bank to raise rates until the middle of next year.

Last month, payrolls in the dominant
services sector rose 91,000 after increasing 20,000 in May. Temporary
help employment rose 20,500, while retail hiring fell 6,600.

In the goods-producing sector, employment
fell by 8,000 after increasing by 13,000, pulled down by declines in
construction. Home building activity has dropped sharply since late
April when a tax credit for homebuyers expired.

Employment in the factory sector, which has
led the recovery, rose by just 9,000 after a gain of 32,000 in May.
Cash-strapped state and local governments were also a drag on employment
last month.

Analysts were
disheartened by the shortening of the workweek to 34.1 hours from 34.2
hours in May and a slip in average hourly earnings. The decline in
earnings is worrisome on two fronts: it could crimp consumer spending,
and it may add to downward pressure on already weak inflation.

"This leaves the Fed on extended hold.
Recent data also heightens concern that the disinflation process has not
yet found a trough," said Michael Feroli, an economist at JPMorgan in
New York.

In June, just over 45
percent of the total 14.6 million people unemployed had been out of work
for more than 27 weeks, little changed from May.

Nigel
Gault, U.S. chief economist at IHS Global Insight was interviewed on
Yahoo Tech Ticker stating that the unemployment rate fell for "all
the wrong reasons":

The U.S. job market
remains anemic. Employers
cut 1250,00 jobs in June, more than expected. The job cuts came
as the government let go 225,000 temporary census workers, as expected.
Meanwhile, the private sector gained 83,000 jobs, the
sixth-consecutive monthly increase but still less than most economists
forecast.

Yet the unemployment rate fell to 9.5% in June from
9.7%, the lowest level in nearly a year. Unfortunately, it dropped
“for all the wrong reasons” says Nigel Gault, U.S. chief economist at IHS Global Insight. The
unemployment rate is lower simply because the labor market shrank, as
more than 650,000 people gave up on the job search last month.

More
telling is the "real unemployment" rate, or U6. Including people
working part-time and those who've given up looking, the real
unemployment rate is 16.5%.

Gault says the lousy job market
reflects an economy still weak and companies making due with less. At
the current pace, the road to recovery will be long and bumpy.

The Daily Kos summarizes the grim statistics:

• About
  14.6 million Americans remain unemployed.
• 45.5% the
  unemployed, or 6.8 million Americas, have been out of work for 27 weeks
  or more. The ranks of these long-term unemployed remains at a
  post-Depression record.
• There are now 7.9 million more
  Americans out of work than when the recession began in December 2007.
  (Roughly 15 million more are underemployed or have dropped out of the
  labor force -- and thus the statistical calculations).

The
statistics are grim, and it's obvious that growth is moderating, but
it's too early to conclude that hiring will not pick up in the months
ahead.

One area where hiring is picking up is on Wall Street. But
Catherine Rampell of the NYT asks
whether this comeback can be sustained:

New data from the New
York State’s Labor Department have shown a sharp increase in financial
industry jobs, with the city adding 6,800 positions from the end of
February through May. That’s the largest three-month increase since
2008, and it has understandably attracted a lot
of
buzz
in
the
econoblogosphere.

But my colleague Eric Dash, who covers the banking industry, warns
that people may be reading too much into this number, since it is not adjusted for
seasonal
changes.

Eric writes me:

The
banking industry’s hiring boom may be short-lived. Wall Street
typically experience a pickup in hiring during the spring and early
summer. Most bankers will not join a new firm until late January or
February, when they receive their annual bonus paycheck. The banks,
meanwhile, are hesitant to hire in the fall to avoid guaranteeing big
year-end bonus payouts along with a forced vacation, known as garden
leave.

Finally,
I had a chat with Stefane Marion, Chief Economist at the National Bank
of Canada, who told me "leading indicators are up, but I need
confirmation in the form of job growth".

Stefane mentioned
on-line ads are up, which is positive. I checked out the Conference
Board's Help
Wanted Online Index:

• Job demand remained
  essentially unchanged in May and June but up over 500,000 nationally
  during the first 6 months of 2010
• Demand for
  sales workers continues to climb
• Job demand is
  strong in several States in the Northeast including NY, NJ & PA

The bottom line is that even though this report was anemic, it's too
early to throw in the towel on US jobs. The recovery will be tepid,
especially if private sector employment doesn't pick up convincingly, but there is
always a lag between employment and leading indicators. Below, I leave
you with Nigel Gault's take on Friday's weak jobs report.

Comments

[cadence]

But, how can this possibly be? Trickle-down economics and offshoring and NAFTA were supposed to create jobs for 16 year olds! Could it be that we've been lied to, so that a few might make a quick buck? It looks like, yes, certain trade restrictions are indeed good for the economy. Unfortunately, this is what all of the countries that we export to have figured out.

[ozziindaus]

http://www.youtube.com/watch?v=S7nXGKBN3Sw

[Hannibal]

I would verge to say that Gov data such as un-employment and cpi can not be trusted. 'Cause in times of deceit "truth" is a patriotic act, which is grossly lacking within our Government.

[Ardent Spirits]

They figure that their intentions are good & that excuses it. Road to hell is paved with good intentions.

[demsco]

You are one of the only ones out there claiming this report was good. Jesus Christ man, it was a horrible report. You simply took some headline figures and extrapolated them out, but you missed oh so much. Mostly, the driving factor in private payrolls was TEMPORARY JOBS, AGAIN!! This is not bullish as they would have gone full time by now. I mean, I don't know what to tell you, keep buying this dip, but don't tell others to. Keep your own mistakes to yourself since Wall Street and the internet is full of shitty advice.

[LarryKudlow]

US Jobs Slipping Away?

They long started slipping away thanks to "free" trade, NAFTA

[Ardent Spirits]

Preaching to the choir. Ross Peroit tried to warn us about NAFTA but they did a vicious political hit on him & he walked away in disgust. "That giant sucking sound."

[Kimo]

Labor arbitrage is the underlying drip, drip, drip of structural job loss. 

It will be either a long time, or cataclysmic loss before we can hold any ground, much less recover.

[Ardent Spirits]

The drip, drip, drip is the country bleeding to death.

[Grand Supercycle]

Updated DOW chart:

http://stockmarket618.wordpress.com

http://www.zerohedge.com/forum/latest-market-outlook-1

[Bear]

Beware the 'Head and Shoulders' ... last July's sprouted a pretty massive melt up. It will probably happen again this time for a week or so and then the 'Failed Rally' we be the last gasp in the 'Biggest Bear Rally' in history. Don't be left long next weekend.

[Ardent Spirits]

Good advice but I been flat to the market for years & years. Ever since I figured out it's as crooked as a dog's hind leg. Especially for the widows & orphans (retail investor) that the smart aleck brokers like to make in jokes about.

[Augustus]

Without greater imports from China,

There will be no need for more delivery people in the US.

[litoralkey]

0.1/34.2= 0.292% loss in wages.

Analysts were disheartened by the shortening of the workweek to 34.1 hours from 34.2 hours in May and a slip in average hourly earnings. The decline in earnings is worrisome on two fronts: it could crimp consumer spending, and it may add to downward pressure on already weak inflation.

Economists are worried that a 0.292% loss in wages will crimp consumer spending, and add to downward pressure on already weak inflation.

ON January 1, 2011, the US Federal tax rate increases as follows:

- The 10% bracket rises to an expanded 15%
- The 25% bracket rises to 28%
- The 28% bracket rises to 31%
- The 33% bracket rises to 36%
- The 35% bracket rises to 39.6%

SO apparently a 3% to 5% loss in wages will not crimp consumer spending, and add to downward pressure on already weak inflation.

Welcome to 1984.  Get angry.

[New_Meat]

litoral-Art Laffer makes this point as well in WSJ:

http://online.wsj.com/article/SB1000142405274870411350457526451374838661...

Further, since there is still time in 2010, tax reduction actions will pull activity into 2010, such as: un-deferring compensation, sell now for lower cap gains taxes, pull in discretionary investments, etc.

2011 not lookin' good to me (nor end of 2010).

- Ned

[Bear]

Wait, wait ... We were told that the Bush tax cuts were cuts for the rich ... so when we eliminate them they will only be tax increases for the rich ... Let's see the poor ten-percenters get a 50% tax increase ... the largest and most regressive tax increase ever ... and that from our 'Progressive' President ... He better reread Wilson's "New Freedom" 

[BRETT]

LIKE ROSS SAID,YOU CAN TURN OFF THE LIGHTS -WERE DONE

[BRETT]

WERE DO WE GO FROM HERE ,NOW THAT ALL OF THE CHILDREN ARE GROWING UP.

[Mitchman]

Leo,  I think that David Rosenberg's analysis as posted by Tyler yesterday, earlier to your post was more analytical and in its analysis better captured how awful the numbers really are.  While I understand your wanting to post a contrarian viewpoint, the arguments in this particular post are so weak as to fall into the category of "tea leaves" and, frankly, unworthy of you.

However, in reading the posts, I can't help but note the number of ad hominem attacks.  These are disappointing, add noting to the discussion and really, just cheap shots. 

[DosZap]

This guy, tells it like it is......Finally. http://finance.yahoo.com/tech-ticker/the-worst-president-in-my-lifetime-howard-davidowitz-on-obama-513494.html?tickers=^DJI,^GSPC,BP,XLF,SPY,DIA,XLE

[WineSorbet]

I think the only thing that's "slipping away" is your sanity.

[williambanzai7]

JOBLESS RECOVERY (T+12 Months):

http://williambanzai7.blogspot.com/2010/07/jobless-recovery-12-months-la...

[lawton]

If those surveyors will just press to get that " I quit looking for work due to being frustrated response" a little harder than they are now then we will be back to 6% unemployment before you know it.

[Ardent Spirits]

When those people are REALLY up against it & have to have a job NOW & they catch some illegal in that job that they need NOW, then is when things will get REAL UGLY. That day is not far off.

[Dismal Scientist]

Leo sleeps well at night in his world of delusion, am sure. Hope that when reality intrudes Leo, your heart can take it. Or at the very least, your clients health...

[williambanzai7]

There is only Steve Jobs.

[doomandbloom]

someone once said that wages were increasing...by 5% or so...cant remember clearly...so apparently everything will be ok...

[ex VRWC]

This is where the jobs went and why they won't come back:

http://willanystand.blogspot.com/2009/10/labor-shock-and-its-role-in-economic.html

[Ardent Spirits]

Let's step back & look at the implications of all this. Do we remain the world's consumer of first, middle & last choice? Do we allow that process to proceed until we are stripped naked in industrial capacity & pauperized as a nation? If we revert to protectionism; can we pull that off? What sort of America would be the result if we walked away from the party? What sort of world would result? What about our policy of allowing in cheap foreign workers To hasten this race to the bottom? How much time before America reaches the point of collapse? Lots of questions but no answers without asking them first.

[Ardent Spirits]

This has been loosely called 'The Race To The Bottom'. My question would be what happens when we (meaning the whole world) gets there. Another thing. What happens when the line representing the cost of moving raw materials & finished goods around crosses the line of increasing fuel costs to accomplish all of that. Anyone care to speculate what the consequences will be & when the crunch will come? Really neat webpage. Thanks for the link.

[DR]

C’mon now, stop being so pessimistic...

Jobs will come back when are all willing to work for Chinese wages and Chinese bosses..

[anarkst]

Going completely off the gold standard in 1971 started this entire de-employment process that will not resolve itself until a balance of trade can be re-initiated.  Tens of millions of American manufacturing jobs have been traded for nothing more than window dressing for the elite.  

Leo, you need to go back and read your history. 

[masterinchancery]

Given the huge and bogus positive "birth/death adjustment", the employment report is fully consistent with an ongoing depression. And how long can the BLS keep subtracting people from the work force when we know that it is in fact expanding?

[Ardent Spirits]

I've heard this called 'The Pollyanna Factor'. That is what the Shadow Statistics sites are all about; to call out the government when it officially lies with statistics. Shouldn't happen in a Democracy (Gov lying to the citizens) but there it is.

[traderjoe]

As long as the MSM media allows them to get away with it. IMHO the BLS numbers are the most statistically distorted fantasy that poses for economic numbers (followed closely by CPI especially the focus on "core"), but the market and MSM eat them up every month. I'd be willing to bet that less than 5% of market participants truly understand how the B/D process and establishment survey really work...

[Zina]

"analysts said the figures were not consistent with an economy on the brink of another recession"

Do a simple math: Private sector payroll (MINUS) birth/death model adjustment.

What remains after Private sector payroll minus birth/death model?

Never forget the birth/death model is a lie, and they will "revise" that numbers later, and "discover" that 900 thousand jobs didn't exist, just as they did in February this year.

[Kayman]

Zina

Haven't heard from you in a while.

Good on you.

[traderjoe]

I most certainly did not think your comment should have gotten junked. A minor point of clarification - the headline BLS number is seasonally-adjusted, while the B/D number is non-seasonally adjusted. You can't simply add or subtract them. They make it as confusing as possible to further hide the charade...B/D model is absurd in a declining economy. 

[Gimp]

Anything Biggs announces publicly is a false flag, reminds you of Buffet, you only know of his positions three months after the fact when he begins to quietly sell his position into the hysteria created by his ownership of said equities.

[Ardent Spirits]

Since Vietnam all wars are fought in the mass media & this is economic warfare.

[DavidRicardo]

Leo is just the sort of quisling who needs to be crushed under the heel of your boot.  This guy is such scum that he must be the invention of a committee established to invent a piece of scum.

Loathesome little fascist creep you are, Leo.

[Kayman]

Now, now, young David- don't be mistaking serious discourse with dry humor. Go back to your math books and dispense with the ad hominems.

[booboo]

"Biggs said yesterday stocks may still rise, comparing the current market to the end of the 1982 recession when the S&P 500 declined 13 percent. The advisory firm founded by Laszlo Birinyi published research on July 1 drawing the same comparison."

Um, yea, and all the while Biggs is unloading his long positions. Confidence, or Confidence Man? Every good swindle needs at least one. 

[the grateful un...]

here's one for you: Local School Board offers hundreds of employees the golden handshake (early retirement incentive), a years salary. A few months later they have to hire the people back as consultants to fill the gap left by their departure.

[TBT or not TBT]

"A few months later they have to hire the people back as consultants to fill the gap left by their departure."

Have to hire them back?    Schools used to teach the three R's much more effectively than today without all the GDF high priced seat warmers parked in the overhead column.

[Thoreau]

Ivory tower musings. Most of these anal-cysts are so high in the nosebleed seats that they have no idea of the drama unfolding onstage.

[Temporalist]

Or conversely they are part of the charade and don't know there is a riot in the bleachers.

[MarketFox]

What seems to be scarce ....SOLUTIONS....

What seems to be plentiful ?....AFTER THE EVENT BLABBER ABOUT WHAT HAS ALREADY HAPPENED...

Improper logic ? Listening to those THAT MISSED THE CALL....

......................................

Do this....

Approach America or any other developed country with some simple questions ...

1) Dear Mr. Businessman....

Under which premise would and could you hire more employees ?

a) The same tax structure with the addition/increase of VAT taxes ?

or

b) Eliminate corporate and income taxes...to be replaced by a simple consumption tax of no more than 15% ...whereby the revenues are shared between the state and fed....

........................................

Small HINT.......B WILL be the response...

........................................

Least understood point...

Tax revenues from B will be many fold that of A in less than 10 years....

........................................

And there will be US labor shortages under B...

.......................................

After the fact BLABBER....is futule....

............................................

The other basic and infallible point....

The number one most needed item that would remedy the current bank shortcomings....

Lots of new clients and the improvement of current clients whereby private asset valuations are increasing....

Valuations = Income + Debt

Ask yourself this question....

What item from the current government has added to valuation ?

Answer...each new item has negated valuation...

........................................

And this is just the start....

[TBT or not TBT]

John Galt!

[Bruce Krasting]

Ever the optomist Leo? Unemployment, as we calculate it, will rise in the coming months. It has to. We could be at 11% by the end of the year. The economy is slowing at every level right now. Within our borders and outside. I doubt that we will see another stimulus this year because of the election. It takes 6 months for any stimulus to have an impact. Read this to mean that the next 12 months (and possibly longer) are going to be pushing 0 growth.

Another bull, Barton Biggs, threw in the towel this week. Barton has been wrong a bunch of times. I don't think this is one of them...

http://noir.bloomberg.com/apps/news?pid=20601087&sid=auMV9NaJR.tk&pos=1