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U.S. Labor Market Continues to Disappoint

U.S. Labor Market Continues to Disappoint

James Clary

Economist

The U.S. economy only added 18 jobs in June according the Employment Situation Summary released by the Bureau of Labor Statistics (BLS), well below the 110 consensus estimate published by Blumberg last week (the Wall Street Journal consensus estimate was 125). This report also featured downward revisions for both April’s and May’s job reports, an indication of dismal economic performance over the past two months. Private employers only added 57 jobs in June (Government Shed 39 Jobs), in contrast with the ADP private employment forecast of an increase of 157 jobs. The BLS report defied expectations that manufacturing would recover as supply chains disrupted by the Japanese Earthquake/Tsunami began to recover; manufacturing employment only increased by 6 jobs.

This is the worst recovery for Payroll growth since the Great Depression, and while initial unemployment claims continue to remain elevated (418 last month), there is no evidence that the labor market will begin to recover. The dismal job performance growth is exacerbated by the realization that the economy needs to grow approximately 160 jobs per month just to keep up with population growth.

This graph was arranged by Bill McBride, Economics Blogger, and shows the percentage payroll job loss of every recession since World War II. Note that the current recession is the deepest, and is experiencing the slowest recovery (note the next worst recession in 1981, quickly reversed after peak unemployment). The dotted line represents the employment level excluding the census hiring and layoffs, which created that unnatural bump in payroll employment.

 
The national unemployment rate increase to 9.2% in May, with the number of unemployed persons having increased by 545 since March.  The labor force has only increased by 15 jobs (a large increase in the labor force would explain an increase in the number of unemployed, but  the labor force participation has remained basically steady during that period, demonstrating real weakness in the economy).

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