US Economy Loses Jobs in June, As Expected

Friday, July 02, 2010

For the first time this year, the economy lost jobs largely as a result of 2010 census workers losing those temporary jobs in June.

The government reported this morning that the nation’s payrolls fell 125,000 last month as a result of the elimination of 225,000 Census jobs. Private sector employment increased by an anemic 83,000 jobs.

The nation’s unemployment rate dropped slightly to 9.5 percent from 9.7 percent. That was the lowest rate since June of last year but the rate fell in large part because the number of people looking for work dropped.

The broader measure of unemployment--one that includes people who worked part-time while seeking full-time jobs and those too discouraged to even look for work--the unemployment rates was 16.5 percent, a slight decrease from the previous month.

“The labor market is recovering at a sluggish pace and there is little reason to expect that to change in the near term,” wrote Joel Naroff, chief economist with Naroff Economic Advisors in a note to clients. “That points to modest growth ahead."

The results from the closely watching monthly job report were in line with economists’ forecasts and US stock markets were up in early trading.

While the job losses were the first decline since December of last year, economists and investors had widely expected these numbers. They worry, however, that the slow pace of hiring by private businesses indicate the economic recovery could be losing steam.

“It’s a slow recovery” said James Angel, a finance professor at Georgetown University, on American Public Media’s “Marketplace.”

For the year, an average of 147,000 jobs has been created each month. Economists say that at least 150,000 new jobs are needed each month to bring down unemployment. With more than 14.6 million Americans now unemployed, companies will need to hire in larger numbers to make a dent in unemployment.

“Businesses added workers but not at a spectacular rate and clearly not fast enough to keep the unemployment rate declining,” said Naroff.

Of those looking for work, nearly half (45.6 percent) have been without jobs for more than six months. Many of those long-term unemployed have also depleted their unemployment benefits and have no relief in sight. Congress adjourned for the July 4th holiday weekend after attempts to extend unemployment benefits failed. Estimated to cost $34 billion, the proposal failed in the Senate as legislators, worried about adding to the already growing deficit, blocked attempts to pass the extension earlier this week. More than 1 million people have lost benefits since the previous federal extension expired and another 3 million could lose benefits by the end of the month.

There were some positive trends in the report. The number of temporary workers increased again by 21,000 jobs. Many employers bring on temporary workers before hiring full-time employees.

As the summer began, people found jobs at amusement parks and in casinos and other forms of recreation. In June, employment rose by 28,000 in those industries.

Healthcare employment increased in June as did manufacturing jobs, with both sectors gaining 9,000 each. Manufacturing is often a leading indicator for the economy and since December, 136,000 jobs have been created.

But in a troubling sign, the number hours worked each week as well as hourly earnings actually fell last month. Employers often increase the hours of current employees as well as pay before deciding to hire more employees. In previous months, hours and pay have increased and for the year increased, but a continued decrease could be a sign that employers do not have enough work to bring on new employees.

The next jobs report is scheduled to be released on August 6th.

What is this? The non-farm payrolls number is a measure of the number of new jobs created by the private sector during the month. It is based on a survey of about 140,000 businesses and government agencies. The national unemployment rate comes from a separate survey of households.

Brian Lehrer: Unemployment Benefits Running Out

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