Why the jobs report was frustrating
Private employment isn't growing. The average workweek and weekly wages are slipping.
Which is one reason today's jobs report was so frustrating. The report showed the first decline in nonfarm payrolls in six months, and the national unemployment rate dropped to 9.5% from 9.7% in May -- but only because many people left the work force.
But even the guts of the report couldn't provide much cheer, which is a big reason stocks were lower today in admittedly light trading.
So what was wrong with the report, besides the obvious? Here's a quick rundown.
The job-loss number. Nonfarm payrolls fell by 125,000, mostly because the Census Bureau released workers hired to work on the 2010 Census. That was yucky in and of itself. Without the Census cuts, nonfarm payrolls would have been OK, but not great.
Private employment. This was the number Wall Street was watching. It went up just 83,000. Nearly half of those gains came from leisure and hospitality. Most Street economists were looking for something above 110,000. So that was a disappointment. Construction lost 22,000, with all subsectors except heavy and civil showing declines.
Health care added 9,000 jobs, its weakest performance since April 2009. Temp employment rose just 21,000, the least since September 2009.
Average workweek. This dropped 0.1% to 34.1 hours. Why get excited about a decline so small? The trend had been rising, and the hope was a rising workweek would translate into jobs created.
Average hours worked. Down again, reflecting some softening in manufacturing more than anything else.
The real unemployment rate. This takes the reported unemployment rate and adds in people working part time because they can't get full-time work and others who have given up. That was at 16.5%, unchanged from May.
Duration of unemployment. A couple of numbers to look at. The number of workers unemployed for 15 to 26 weeks grew by 47,000. The odds that someone laid off in May will find a job in June, about 22%.
Education and jobs. It's understandable that 14.1 million of workers with less than a high school diploma are out of a job. But 12.6 million workers with some college or even a graduate degree were unemployed in June. That hasn't changed in the last four months.
"Right now, about all you can say about the employment trend is that it's choppy, which is what you'd expect in a recovery from a serious crisis," wrote Philippa Dunne and Doug Henwood of the Liscio Report, a newsletter that tracks tax data and economic trends.
The report also suggests, they noted, that the Federal Reserve is not going to raise interest rates or tighten credit "in any serious way in the immediate future." And "what had been rising political pressure for deficit reduction could well dissipate."
So, what will turn the situation around? Employers need a reason to hire, and right now it looks like they don't see a reason to hire people back.
There's little demand for new housing. That's a function of the enormous number of new homes built between 2005 and 2008 that outstripped the demand.
Now, the issue is the job market coupled with a deep decline in household formation rates. Children are moving in with parents. Divorced couples are continuing to live in the same house. And foreclosures are a huge factor and getting larger.
There's a second issue about uncertainty coming from Washington on taxes, health care and financial reform that makes employers reluctant to hire. And besides, many of the biggest employers are still moving jobs outside the United States.
The recession is the most serious since World War II, but its fundamental cause -- the near-collapse of the financial system and its effect on the entire economy -- also means it's harder to fix.
The jobs picture needs a prod, one that the private sector doesn't want to apply.
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