Friday, July 02, 2010

Unemployment Data Again Points To Weakness In Economy

There really isn't any good way for people to spin the latest unemployment data. The temporary boost due to the government hiring workers for the census is coming to an end, so the hundreds of thousands hired for that job are again unemployed and aren't being replaced.
Employers cut 125,000 jobs last month, the most since October, the Labor Department said Friday. The loss was driven by the end of 225,000 temporary census jobs. Businesses added a net total of 83,000 workers, an improvement from May. But that's also below March and April totals.

The unemployment rate dropped to the lowest level since July 2009. But it fell because 652,000 people gave up on their job searches and left the labor force. People who are no longer looking for work aren't counted as unemployed.

The report indicates that businesses are still slow to hire amid a weak economic recovery. Analysts expected private payrolls to rise by about 110,000, according to Thomson Reuters.

The nation still has 7.9 million fewer private payroll jobs than it did when the recession began. It takes about 100,000 new jobs a month to keep up with population growth. The economy needs to create jobs at least twice that pace to quickly bring down the jobless rate.
Hanging on to the unemployment rate (the U3 rate) dropping to 9.5% from 9.7% isn't exactly reassuring since the drop was entirely due to hundreds of thousands of people deciding to get out of the job hunt altogether. Reducing the number of people looking for a job reduces the rate - not a way to organically improve employment.

Private sector hiring is still sorely lagging, and this continues to hamper any kind of economic recovery because businesses aren't hiring, individuals aren't buying big ticket items such as homes or cars, and all this further complicates states and federal budgeting - adding to deficits because of a lack of revenues.

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