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

[BobWatNorCal]

Jobs not good here in NorCal (Silicon Valley) but I do see a lot of houses with "sale pending". The real estate appears to have survived, unless there is a new hit coming.

[TBT or not TBT]

John Galt.

[maddy10]

Solars baby!

Obama's new mantra will be 'Oil out, Solars in'

BP has started buying solars already! didn't ya know!

sarcasm off 

[IE]

Just for future reference, it is:

[/sarcasm]

But other than that, your post was perfect.

[maddy10]

Thanx

But somebody junked ya!

Whozzat,eh?

[egdeh orez]

Buy the dips, Bitches!

[papaswamp]

Again someone who ignores the civ workforce decline by 652,000 or the more glaring Not In Labor Force (NILF) growing by 842,000...bringing the 2 month NILF total to 1.33 MILLION. Wake the fuck up!

[Eternal Student]

But, how can this possibly be? Trickle-down economics and offshoring and NAFTA were supposed to create jobs! 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.

[Ardent Spirits]

America is so concerned about not being 'Protectionist'. It's become the whole world's running joke. ALL THE REST are protectionist only America is stupid enough to sing hymns to the true faith.

[New_Meat]

It is probably Obama-care that is freezing small businesses.  Romney-care certainly has done so here in MA.

I'll see your "protectionist" and raise you a "Smoot-Hawley."

- Ned

[Ardent Spirits]

Not sure what you mean. We should do something as extreme as Smoot-Hawley? Probably counterproductive, it was a disaster. Read the Labor Arbitrage post below in this thread. We can't compete with cheap labor elsewhere in the world, it's just too cheap. That leaves US workers between a rock & a hard place. Do you want your children's hopes reduced to owning a fan & a motorbike? I think we need to take a hard look at who is gaming us under the pretext of Free Trade. Call it Fair Trade. Oh & I get it, you don't like Health Care Reform.

[BobWatNorCal]

Not my area of expertise but people say you need

roughly 400K private economy jobs to be breaking

even. More than 400K jobs per month and the u/e

rate starts to subside.

Not happening.

[trillion_dollar...]

And you can probably multiply that 1.33 million by two to account for all the new college graduates who have now "entered" the workforce.

Absolute catestrofuck.

[sethstorm]

You incorrectly imply that they weren't in it already before they graduated.

Just because you do not have a degree does not imply that:

a) you are not in the workforce

b) you deserve only a drudgery/temp job

[Temporalist]

I think the point is that the majority of students do not hold jobs while in school.  They go into massive debt instead and are subsidised by their parents.

And those students that do work are most likely in part-time jobs or internships that pay little.

[Ardent Spirits]

The worst part of it is these young prople are buying into a failed system. Scarcity of college degrees over generations & the PR of the colleges says that a degree is the path to success & riches. Still so in our changed world? There are lots of college grads now. The knowledge base is advancing so fast that your degree will be obsolete in a few years. Still worth racking up the mountain of debt required to get there? All part of the fading American Dream.

[sethstorm]

Still not enough of a justification for drudgery-or-degree.

They are in the job market.  They have not "entered" what they already were in.

[booboo]

ARTHUR:
     Victory is mine!
     [kneeling]
     We thank Thee Lord, that in Thy mer--
BLACK KNIGHT:
     Hah!
     [kick]
     Come on, then.
ARTHUR:
     What?
BLACK KNIGHT:
     Have at you!
     [kick]
ARTHUR:
     Eh. You are indeed brave, Sir Knight, but the fight is mine.
BLACK KNIGHT:
     Oh, had enough, eh?
ARTHUR:
     Look, you stupid bastard. You've got no arms left.

[Tyler Durden]

Here you go:

[The Alarmist]

OK, then, we'll call it a draw!

Is there some hidden political allegory in this, with the losing side being represented by a Black Knight?

[Commander Cody]

Thanks, I needed that.

[RaymondKHessel]

Good thing the economy is on autopilot so BO can focus on healthcare and union-building.