Payrolls fall by 62,000 in June
Unemployment rate steady at 5.5%, worse than expected
By Rex Nutting, MarketWatch
Last update: 10:41 a.m. EDT July 3, 2008
WASHINGTON (MarketWatch) -- The U.S. economy shed 62,000 jobs in June while the unemployment rate unexpectedly remained at a four-year high of 5.5%, the Labor Department reported Thursday.
Payrolls have now declined in all six months this year for a total job loss of 438,000, the strongest evidence that the economy fell into a recession in the first half of the year. Read related commentary.
The report doesn't "point to an economy that is crashing and burning," wrote Joel Naroff, president of Naroff Economic Advisers. But "it is consistent with an economy that is in a deep funk."
Job losses in June were slightly worse than the 40,000 expected by economists surveyed by MarketWatch. The unemployment rate was expected to fall to 5.4%. See Economic Calendar.
Payroll losses in April and May were revised down to show 52,000 more jobs lost in those months. May's loss now measures 62,000.
Total hours worked in the economy fell by 0.1% in June. In the factory sector, total hours worked fell 0.5% in June and are down 3.6% in the past year.
Most analysts expect unemployment to rise further this year as the economic storm clouds gather force. Rising energy prices, falling home and equity prices, and a severe credit crunch will keep the economy weak, they say. Exports and the $107 billion in stimulus checks are the main factors supporting growth.
Average hourly earnings rose by 6 cents to $18.01, or 0.3%, in June. In the past year, average hourly earnings are up 3.4%, while consumer prices are up 4.2%.
"Wage inflation appears to be moderating in response to a deteriorating labor market - and real wages are plummeting," wrote David Greenlaw and Ted Wieseman, economists for Morgan Stanley. Falling wages should keep inflation contained, and will reduce consumer spending as well, they said.
The report is likely to have little impact on the Federal Reserve's internal debate about monetary policy. Few analysts expect the Fed to raise or lower interest rates in the next few months, although financial markets do expect two rate hikes by the end of the year.
The Fed has expected the economy to weaken, which should in turn bring down troublesome inflation rates. The Fed will see the July jobs report before its next policy meeting on Aug. 5.
"The potential for the unemployment rate to rise to 6.0% should keep the Fed on hold," wrote Stephen Gallagher, economist for Societe Generale.
Construction, manufacturing and temporary-help services reported heavy job losses in June. Construction payrolls fell by 43,000, factory payrolls fell by 33,000, and temp-agency employment fell by 30,000. Retail jobs fell 7,500, while financial services shed 10,000 jobs.
Hiring remained strong in the usual places: Health care added 15,000 jobs. Government added 29,000 workers. Food services added 16,000 jobs.
Of 274 industries, 46.9% were hiring in June, up from 45.6% in May. Of 84 manufacturing industries, 33.3% were hiring, down from 41.7% in May.
In the separate survey of households used to figure the unemployment rate, the government reported employment fell by 155,000, while unemployment rose by 12,000. The labor force fell by 144,000.
The labor-force participation rate fell by a tenth of a percentage point to 66.1%
The unemployment rate for adult men rose by two-tenths of a percentage point to 5.1%, while the rate for women fell to 4.7% from 4.8%. The jobless rate for teens dropped to 18.1% from 18.6%. The jobless rate for blacks fell by a half percentage point to 9.2%. It was steady for whites at 4.9%.
A broader measure of unemployment that includes discouraged workers rose from 9.7% to 9.9%, the highest in four years.
The number of people who were working part-time because a full-time job was not available rose 3.5% in June to 5.4 million, up 1.1 million in the past year and the highest in 14 years.
In a separate report, the Labor Department said initial jobless claims rose by 16,000 last week to 404,000, just the second time in this cycle claims have been above 400,000. Meanwhile, the smoothed trend for continuing claims rose again to a fresh four-year high.
By Rex Nutting, MarketWatch
Last update: 10:41 a.m. EDT July 3, 2008
WASHINGTON (MarketWatch) -- The U.S. economy shed 62,000 jobs in June while the unemployment rate unexpectedly remained at a four-year high of 5.5%, the Labor Department reported Thursday.
Payrolls have now declined in all six months this year for a total job loss of 438,000, the strongest evidence that the economy fell into a recession in the first half of the year. Read related commentary.
The report doesn't "point to an economy that is crashing and burning," wrote Joel Naroff, president of Naroff Economic Advisers. But "it is consistent with an economy that is in a deep funk."
Job losses in June were slightly worse than the 40,000 expected by economists surveyed by MarketWatch. The unemployment rate was expected to fall to 5.4%. See Economic Calendar.
Payroll losses in April and May were revised down to show 52,000 more jobs lost in those months. May's loss now measures 62,000.
Total hours worked in the economy fell by 0.1% in June. In the factory sector, total hours worked fell 0.5% in June and are down 3.6% in the past year.
Most analysts expect unemployment to rise further this year as the economic storm clouds gather force. Rising energy prices, falling home and equity prices, and a severe credit crunch will keep the economy weak, they say. Exports and the $107 billion in stimulus checks are the main factors supporting growth.
Average hourly earnings rose by 6 cents to $18.01, or 0.3%, in June. In the past year, average hourly earnings are up 3.4%, while consumer prices are up 4.2%.
"Wage inflation appears to be moderating in response to a deteriorating labor market - and real wages are plummeting," wrote David Greenlaw and Ted Wieseman, economists for Morgan Stanley. Falling wages should keep inflation contained, and will reduce consumer spending as well, they said.
The report is likely to have little impact on the Federal Reserve's internal debate about monetary policy. Few analysts expect the Fed to raise or lower interest rates in the next few months, although financial markets do expect two rate hikes by the end of the year.
The Fed has expected the economy to weaken, which should in turn bring down troublesome inflation rates. The Fed will see the July jobs report before its next policy meeting on Aug. 5.
"The potential for the unemployment rate to rise to 6.0% should keep the Fed on hold," wrote Stephen Gallagher, economist for Societe Generale.
Construction, manufacturing and temporary-help services reported heavy job losses in June. Construction payrolls fell by 43,000, factory payrolls fell by 33,000, and temp-agency employment fell by 30,000. Retail jobs fell 7,500, while financial services shed 10,000 jobs.
Hiring remained strong in the usual places: Health care added 15,000 jobs. Government added 29,000 workers. Food services added 16,000 jobs.
Of 274 industries, 46.9% were hiring in June, up from 45.6% in May. Of 84 manufacturing industries, 33.3% were hiring, down from 41.7% in May.
In the separate survey of households used to figure the unemployment rate, the government reported employment fell by 155,000, while unemployment rose by 12,000. The labor force fell by 144,000.
The labor-force participation rate fell by a tenth of a percentage point to 66.1%
The unemployment rate for adult men rose by two-tenths of a percentage point to 5.1%, while the rate for women fell to 4.7% from 4.8%. The jobless rate for teens dropped to 18.1% from 18.6%. The jobless rate for blacks fell by a half percentage point to 9.2%. It was steady for whites at 4.9%.
A broader measure of unemployment that includes discouraged workers rose from 9.7% to 9.9%, the highest in four years.
The number of people who were working part-time because a full-time job was not available rose 3.5% in June to 5.4 million, up 1.1 million in the past year and the highest in 14 years.
In a separate report, the Labor Department said initial jobless claims rose by 16,000 last week to 404,000, just the second time in this cycle claims have been above 400,000. Meanwhile, the smoothed trend for continuing claims rose again to a fresh four-year high.
Labels: BLS, Job Market, US Job Market
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