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

[Leo Kolivakis]

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.

“This is what always happens at this stage of the cycle,” Biggs said on Bloomberg Television. “We are at exactly the same stage in the cycle as we were in 1982, using the exact kind of words: ‘The U.S. economy is collapsing, the world is collapsing, it’s the worst time since the Great Depression.’ Blah blah blah.”

DITTO!!!!

[Ardent Spirits]

Public works are an age old standby, usually tied to religion. Thousands of years of stability in ancient Egypt. Hundreds of years of good jobs building the great cathedrals in Europe. Military spending looms larger in more modern times; The Spanish Armada, The Crusades. Can be a force for good if used right, or maybe not.

[TBT or not TBT]

One word:   Reagan.

[NOTaREALmerican]

Another two words.   More debts.   

Maybe the big O should build another 600 ship navy we don't need.

Reagan's debt is conveniently ignored by the "conservatives" who love debt for war.   All the big-government type love their own debt tho.   Kinda like dogs and poop.

[Mitchman]

+1!

[zhandax]

How big a coincidence is it that the Federal Reserve Act was enacted in the same generation as the Sherman Antitrust Act of 1890?

[zhandax]

Further point, who generated the two biggest headline-grabbing credit offerings the last couple of weeks?  Spain and BP...  Apparently if you are marginal and want to borrow in 2010, you need to be big enough to spawn CDS.

[zhandax]

Cut Leo a little slack.  He realizes that the banks are not lending to small and medium businesses.  He is just too lazy to go visit a few banks and see that it is not because the banks have better alternatives to lending.

Hey Leo, where are the lines of creditworthy small and medium businesses wanting to borrow money at the banks?

Leo, for your next blather, why are so few of these businesses now creditworthy and why do the ones who are creditworthy not want to borrow?

For the broader picture, why was uncle sugar so willing to backstop lending to deadbeats to buy overpriced houses but he draws the line at deadbeat businesses who might along the way hire a person or two?  If I were not the type to avoid concluding conspiracy when stupidity offers a satisfactory explanation, I could almost detect an agenda here (uncle sugar's; not yours).

[TBT or not TBT]

And why would businesses want to borrow more, when they know taxes and costs are going up dramatically, within a general climate of vilification of business, and unquestioning government empowerment of rapacious unions and special interest groups?  

I'm hearing crickets on that one.   If Leo wants the answers, he should spend some time with business people.   Those suckers that organize the resources in the economy to produce goods and services demanded by said economy.   A recovery will happen if there is emphasis on incentives.

[overmedicatedun...]

leo, obuma is giving solars $2 billion push with taxpayers money / debt..gotta be bullish for co's that can't make a profit without gov handouts..I'll say it for you: buy solars. the new economy of pretend profits for pretend earnings all based on taxpayer debt.

[Ardent Spirits]

So, you don't think a little seed money is justified? 2 bil is chump change in today's world. Will you still be singing the same song after the next gas crunch when prices go to 6.00 a gallon & then fall back to 4.00 & STAY THERE? Do you enjoy kissing a bunch of towelhead's butts for their oil at whatever price they care to name? Get real.

[Ned Zeppelin]

No drivers for employment. No tech bubble, no real estate bubble, no "green manufacturing bubble." Name the driver for the employment. I'll save you the trouble - there is none.  We're chugging along on fumes, consuming savings and other capital to maintain appearances.  The only possible source of a dramatic improvement in employment will come in the form of working for the military during the next war.  No mention by Leo of the birth/death model effect on the supposed pickup in private employment, but I'll grant that ADP's count might be closer to the truth: 13,000. Which in a country the size of the US is much less than the statistical deviation to be expected in the measurement to begin with. And this ridiculous blather about Wall Street hiring (which is a thread lately for some bizarre reason) - puh-leze, just what we need more wealth extractors looking for ways to cheat people.  If anything, the US financial sector desperately needs to contract.  So, we're flat, and will remain so for as far as the eye can see, or down, as the stimulus fade grows and state and local governments increase their layoffs with a vengeance. There is no "monster jobs report" in our foreseeable future.

Now you can throw in your ZH monogrammed towel. And by the way, all of this was called by many of us here on ZH long ago, and consistently, in the face of aggressive, misleading and baseless CNBC cheerleading. This is a balance sheet recession: we've hit the wall. This time, it's different, and using your playbook from the post WWII recessions that preceded this crisis will not serve you. 

What astonishes me, and perplexes me, is the unwillingness to acknowledge that which is plainly evident, so readily apparent. I suppose some of us do not adapt to new conditions all that well, and cling to what was rather than what is.

[sgt_doom]

+1 trillion.

Yup, you sadly said it all.

So many mistake commerce for an economy, and we'll always have commerce; it dates back to the cave dweller days, which many of us will shortly be returning to as well.

(Historical footnote: I'll trade you my skanky woman for that nice spear and hide, Ugh.)

There is obviously no economy when the majority, or perhaps vast majority, of the GDP is based upon debt, not production, not development, not future-oriented creation, but debt....or fantasy finance (an apt description I've read a number of places now).

[Ardent Spirits]

We will cease to be a great nation if all we do is push papers around & try to trick anyone available into debt slavery while calling this our economy.

[Temporalist]

Agreed about the Wall St. jobs Ned. This article is...frustrating to use a kind euphemism:

Manhattan Apartment Sales Surge to Two-Year High as Wall Street Adds Jobs

"The securities industry accounted for 5.5 percent of the city’s private sector jobs in 2009 and 22 percent of total wages, according to the Labor Department."

http://www.bloomberg.com/news/2010-07-01/manhattan-apartment-sales-surge...

[Kayman]

NZ

Excellent post.

[Escapeclaws]

I never understood the economy even when it was functioning. How can you have umpteen dress shops on the same street all selling the same cheap but stylish garbage? The economy has always been based on fumes, at least in the last 30 years. Then you have the overpaid parasite classes skimming off the cream. I've never understood how you can have one or two companies that actually make something and the rest is just flotsam and jetsam. Always felt like Alice in Wonderland even when it was supposedly humming along. Nothing's really changed--were just seeing the dark side of the moon which was there all along.

[traderjoe]

In Seattle we have an outdoor mall with 5 Starbuck's within say 300-400 yards of each other. 

[Bear]

In Vancouver, BC ... there is one intersection with a Starbucks on 3 of 4 corners ... Pacific North-westerners really love their coffee! I'm in Hawaii and I have to drive 1/4 to my SBucks. 

[TBT or not TBT]

Shopping is something humans like to do, and the economy is about directing efforts to deliver things and experiences humans want, so there you go.   Ergo your dozen dress shops, dozen sporting goods shops, dozen car dealerships, and on and on.

[Temporalist]

Shopping is not something humans like to do it is something too many Americans have been conditioned to believe is the thing to do to be cool.  If you aren't walking around with a shopping bag in your hand, one with the right label on it, you may as well be dead.

If you don't have an iPood, Nikes, Timberlands, Tag Heuer, Rolex, Prada, PSP, Wii, Cabbage Patch, Beanie Baby, you're not cool and if you're not willing to kill someone for them so your kids can have it you're not a good parent.

When did mindless children buying things for their pathetic offspring start to run the world?

[Ardent Spirits]

The agent of conditioning is the mass media which exist by & for advertising. Television especially is a powerful conditioner of buying behavior. TV is reaching a kind of saturation point. For example the final 'Lost' show had aproximately 45 min of commercials to 60 min of program. There are now way more than "100 Channels & Nothing On". Perhaps this has something to do with our Consumerist Society & our something for nothing attitudes. Whatever you do don't underestimate the power of advertising.

[TBT or not TBT]

"Shopping is not something humans like to do it is something too many Americans have been conditioned to believe is the thing to do to be cool.  "

Well, you'd have to explain why, neurologically speaking, shopping stimulates what scientists call our reward system.   We get the same sort of boosts from other rewarding activities too, such as eating, sex, dancing, various drugs, chocolate, ...and victory, napalm in the morning.    Shopping rocks.

[Bear]

Shopping and sex? What gender are you?

[Cathartes Aura]

dude, it's called "social conditioning". . .

baa, baaaa, baaaaaaaaaaa.

[TBT or not TBT]

I forgot dozens of strip bars, dozens of bars, churches, DIY mega hardware stores, PM dealers, and gun shops.  The latter two are doing very well while not much else is.

[Kali]

Church don't pay property taxes.  They are a drain on local economies.  In some small rural counties, the number of churches outnumber any other bizzes.  They are laying off police, firefighters, teachers, but keeping the preachers.  Sounds like taliban and Afghanistan to me.

[TBT or not TBT]

Yeah, such a drain, teaching children morality, giving them a sense purpose and an inner governor, organizing sports teams in a doezen categories, dances, dance classes, free music and singing instruction, a multitude of youth programs, young adult programs, marriage counseling, charitable programs galore, help to families with sick, dying, or dead family members, AA type programs.   All paid for by voluntary contributions and mostly voluntary labor.    So much for you taleban thesis.   And full disclosure I'm an atheist.

[Kali]

Always find the child molesters and thieves at the churches.  They are just a big a scam as Wall Street.

[Ardent Spirits]

Sad but true. Lots of evil & opportunistic lurkers in many churches. Kind of like ZH blog.

[ZackAttack]

Maybe the real lesson of Japan is that real estate *is* the bubble of last resort in a fiat system.

[happybob007]

Well, it does seem to be a bubble in one of the least liquid asset classes available.

[Snidley Whipsnae]

Residential real estate has been a sacred cow in America since at least the end of WW1. For instance; In Switzerland ~22% of the population own their own homes vs ~67% in America. How did this happen? Residential RE in the US has been subsidized to death...literally.

Japan has the advantage of public debt owned by it's citizens. The US is one floock up away from a bond market explosion that will shake the world financial system to it's core.

[Ardent Spirits]

I have personally never owned a home. There are millions like me ( wish I had a figure to plug in here). So far in my working life & during this crisis I have probably paid at least an additional 100K in taxes for other people's homes. Why is that considered fair & good public policy? A large part of the current mortgage crisis was caused by these misguided public policies aimed at cramming anyone with a pulse into a home whether they could afford it or not. The price bubble was caused by these policies. Every day the only solutions offered involve me paying more & more to support the bubble (prevent it's deflation) & making the banks who implemented the scheme (and profited) richer & richer. I AM GETTING A LITTLE PISSED HERE. I had lots of things I might have done with that 100K instead of giving it to pampered middle class family's so they can have a 'nice' suburban lifestyle. There are millions of folks like me.

[ConfederateH]

Residential realestate is on fire in Switzerland now.  A libor variable rate loan can be had at 1.8%!  Appartments are selling like warm weggli's.

[AUD]

But no monster?

[The 22nd Prime]

Leo, you're the toughest bitch in fightclub.

Respect

[fireangelmaverick]

Leo, I think I am going to buy calls. You have convinced me.

Calls on the US unemployment rate.

[AR15AU]

Leo's posts have more pinatas for us to bat down than a Mexican birthday party.

[Cui Bono]

Hey AR,  you are usually are spot on with real teeth so I am reluctant to correct you- but fools rush in.....  I believe your post should have read-

Leo's posts have more pinatas for us to bat down than a Mexican birthday party at Nadya Suleman's house

I'll go back under my rock to work on my solar powered bottle rocket ignitor...CB

[TBT or not TBT]

I'm finishing up my full-auto bottle rocket rocket launcher.  It will be cloudy in TX this weekend, so I'll forgo the solar ignition.

[Temporalist]

I found the problem with the auto-launcher was the fuse so you must eliminate it completely and ignite directly to the base of the rocket.

Hope this tip helps.

[TBT or not TBT]

Indeed, model zero ignited successive fuses in the magazine too soon, which stayed in the launcher with engine running, igniting all successive fuses then exploding, launching lit bottle rockets into the air among spectators.  Good times!

[homersimpson]

"The bottom line is that even though this report was anemic, it's too early to throw in the towel on US jobs." The towel was thrown in when Heir Savior decided to piss away $3+ trillion on the symptoms and not the causes. He was better off giving everyone a huge handout then to piss away taxpayer money to those who helped him get into office.

[maddy10]

My God, Going through Mr Krugman's blog is so painful

He appears to be totally against common sense

'Iceland's miracle because they had a big devaluation in currency'- it is okay for pops and grannys in iceland to pay more for everything now

" China should revalue renminbi or face sanctions' and Globalisation should continue HUH, ??????

I thought globalisation was new name for factories in china, raw material import to china and finished goods export to US

How can punishing china incentivize globalisation ? Absurd

Does anybody in china even read this shit?

Yeah, Punish Macdonald's for selling cheap hamburgers, they made Americans eat more and get obese.

Man, I deserve a trillion Nobel prizes when this guy can have one.

[sgt_doom]

Because Krugman is a member of the Group of Thirty, which pushed this entire mess on the rest of us (and I'm speaking both nationally and globally).

He can't stray too far from the official line.

[RockyRacoon]

Krugman on Charlie Rose right now.  You might want to catch the interview tomorrow.

http://www.charlierose.com/schedule/

Friday, July 2, 2010

...and for the sports fans, the same show will feature

NBA Free Agency analysis

with Chris Broussard, Jonathan Abrams, Jim Gray and more on Jul 2, 2010

[Cathartes Aura]

thanks, I'll pass on the invite to Charlie Rose. . .

the same Charlie Rose who attended the Bilderberg 2008 bash, along with Ben Bernanke, Tim Geithner, Hank Paulsen, Tom Daschle, David Rockefeller, and of course, that Nobel Peace Prize fave, Henry Kissinger. . .

and many, many others. . .

[NOTaREALmerican]

Ahh.  A true American media sycophant.    And what most of American media apparently aspire too.

(I know that's would I'd do.  Better to drink the nobility's wine than fight with them.  The peasants don't respect a reporter finding out the truth anyway.  They just accuse him of being unpatriotic).

[maddy10]

I would like to look in his eye on the day USD loses currency status and ask him what do you do now?

His sarcasm about 10 year note heading below 3% is like -'that annoying guy in class who gets away with cheating exams everytime and boasts about it'