June 2011 Employment Report

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Headline numbers from the June employment report were stunningly weak. That report showed the U.S. economy added only 18,000 nonfarm jobs, and that the unemployment rate ticked up by another 0.1 percentage point, to 9.2 percent. If future revisions to the June report follow the pattern set by April (another -15,000, bringing the total April revisions to -27,000) and May’s (-29,000) data, it is entirely possible that June’s gain could ultimately be wiped out.

Once again, the lion’s share of job gains occurred in Leisure & Hospitality; typically, those jobs are part-time and/or pay low wages. Job losses were greatest in Financial Activities and at the federal and local government levels.
 

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Breaking the employment data out by full- and part-time categories showed that the number of persons employed full time fell by 435,000 in June, while the number of persons employed part time for economic reasons rose by 4,000. One would ordinarily expect to see more full-time employees and fewer part-timers in an improving economy.

Over 7.1 million people were not counted as being in the labor force but who would like a job now. On a potentially positive note, however, the total number of persons not considered part of the labor force fell back to 85.0 million -- slightly below May’s 85.9 million.
 

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Other discouraging aspects of the report included a civilian labor force participation rate that fell to 64.1 percent (a 27-year low) while the annual percentage increase in average hourly earnings of production and non-supervisory employees dropped by nearly 0.2 percentage point, to 1.9 percent; with the consumer price index for urban consumers rising at a 3.6 percent annual pace, wages are falling in real terms (i.e., wage increases are not keeping up with price inflation).