But, private sector job losses in excess of 400,000 this deep into a recession cannot be viewed as anything but terrible news. –Joshua Shapiro, MFR Inc.
The headline payroll drop overstates underlying job losses because of the 49,000 decline in federal employment, which was largely due to the layoff of temporary census workers (which boosted payrolls in April)… Nonetheless, the rate of private sector job losses is slowing (the peak rate of job losses was the November–February period) and we expect that trend to continue… We are encouraged that both the narrow and broad measures of unemployment rose only marginally in June and this, along with the slowing in the rate of private sector job losses, further suggests that the recession is drawing to a close. –RDQ Economics
The payroll number is very disappointing. We had hoped to see a third straight movement back towards the 200,000 or so implied by the level of jobless claims, but instead the gap widened again, suggesting gross hiring remains extremely weak. The deterioration from May was mostly in services… In short, labor market is still terrible; don’t be swayed by a small unemployment rate rise. Wages will soon be falling outright, a classic deflation signal. –Ian Shepherdson, High Frequency Economics
Services and construction accounted for most of the steeper declines with bigger layoffs prevalent across most industry groups. On a slightly less discouraging note, job losses in manufacturing were the smallest since last November. Excluding the motor vehicle industry, declines in manufacturing jobs have gotten progressively smaller for six straight months. –Nomura Global Economics
We have a suspicion that the influx of school leavers into the labor market may have been a factor as well, as the numbers finding jobs appear to have been lower than allowed for in the usual seasonal adjustments. The alternative household survey measure shows an 83,000 decline in employment among 16 to 19 year olds last month, while the unemployment rate for that age cohort jumped to 24.0%, from 22.7%. As a result, teenagers accounted for 22% of the 374,000 decline in household employment despite making up only 11% of the labor force. –Paul Ashworth, Capital Economics
The larger than expected decline in private payrolls reflected a quickened pace of job loss in sectors such as construction and temp help. Meanwhile, the decline in census-related jobs in the government sector appeared to be right in line with our expectation (-50,000). Also, it’s worth noting that employment at auto dealers fell only 9,000 during June and we are likely to see much sharper declines in this category over the course of coming months. –David Greenlaw, Morgan Stanley
Interestingly, the only areas that showed any growth in employment were the already bloated sectors of education and health care.
