Friday, July 06, 2012

Yet Another Mixed Unemployment Data Report

The unemployment figures are out for June, and it's a mixed bag. ADP says private payrolls grew 176,000, well above the consensus estimate of 100,000. That was bolstered by an upwards revision of May to 133,000. However, the Labor Department's job figures were worse than expected. Only 80,000 nonfarm jobs were created.

The unemployment rate has remained at 8.2%. The U-6 rate is up to 15.1%, after falling to 14.3% for May (unadjusted). Adjusted for seasonal fluctuations, the rate is still higher - at 14.9%.

Expect Republicans to hammer the Obama Administration for the ongoing troubles with job creation, while Democrats will attack Republicans for blocking more expansive programs. The economy will continue to be the top issue going into November's election.

While the President has little effect on the economy, the President will take the credit or blame for the ongoing conditions, even if the situation is beyond their control - such as the ongoing credit/debt problems all over Europe and fears that Japan is about to run out of money, it's on the verge of having its own debt ceiling troubles and it has a greater exposure to European debt than the US.

The ongoing Eurozone troubles are causing manufacturers to scale back efforts, which means that job creation is also slowing.
Debt woes have bogged down much of Europe, sending some countries into recession. The eurozone crisis in turn has dulled economic growth around the world from China to Brazil. A survey on Monday found U.S. manufacturing contracted for the first time in nearly three years in June.
Europe is not the only worry weighing on the U.S. outlook. Washington plans enough belt-tightening at the start of 2013 to easily send the economy into recession. Cautious observers wonder if lawmakers can avoid this "fiscal cliff."

"Firms are saying, 'Is there really a reason to ramp up hiring right now?'," said Bullard.

Job creation averaged 75,000 per month during the second quarter, compared with an average increase of 226,000 in the first quarter. Part of the slowdown could be because mild weather led companies to boost hiring in the winter at spring's expense.
But recent weakness in everything from retail sales to business sentiment suggests something more fundamental is at play.

"We're not expecting things to take off in the second half of the year," said Sara Klein, an economist at Moody's Analytics in West Chester, Pennsylvania. "Weather wasn't the only factor."

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