Thursday, 3 July 2008

June NFP's Down 62,000 in June

US non-farm payrolls fell -62,000 in June, slightly worse than expected but not as bad as I had expected. Given recent data I thought we may see a triple digit decline. However that said, the report still wasn't positive and I believe it will only be a matter of a time before we see triple digit declines. The details were as follows:

Construction -43,000
Manufacturing -33,000
Retail trade -8,000
Professional and business services -51,000
Service providing +7,000
Leisure and hospitality +24,000
Government +29,000

As usual, the controversial Birth / Death adjustment warrants a shake of the head. Apparently 29,000 new construction jobs were added in June along with 86,000 in the hospitality sector.

Now let's look at why this was a less than impressive report. Downward revisions to April and May totalled -52,000. The 0.5% jump in the unemployment rate seen last month that was assumed to be a statistical blip because of teenagers entering the workforce stayed at 5.5%. That was despite 300k teenagers leaving the workforce in June.

Initial Jobless claims jumped to a seasonally adjusted 404k in the latest week and as can be seen below, the 4 week moving average, excluding Hurricane Katrina hit their highest levels since September 2003.

Also the ISM non-manufacturing index fell below the 50 level marking the dividing line between expansion and contraction. The Employment component of that index as shown below plunged from 48.7 to 43.8, not a good sign for employment.

All in all, there is very little to be encouraged by in the latest data on US employment. Next month should interesting as it includes a semi annual revision that will proabably show the BLS has been under reporting job losses so far this year.