Payrolls Decline 467K in June; Unemployment Rate at 9.5%

 

Thursday, July 2, 2009

 

Payrolls fell by another 467,000 in June, while in a separate survey, the unemployment rate rose to 9.5%, it's highest in more than 26 years. The Labor Department also reported the number of first-time benefit claim applicants totaled 614,000 for the week ended June 27th, slightly lower than the previous week number but remains twice as large as the 12-month average this time last year.

 

This puts the current level of unemployed at approximately 14.7 million people. It also puts the total number of jobs lost at 6.5 million since the recession officially began in December 2007.

 

The service-related sector declined by 244,000 while retail jobs declined by 21,000 and financial positions fell by 27,000. Government payrolls declined by 52,000, mostly due to release of temporary census workers. One of few sectors that added jobs was education and health services which added about 34,000.

 

With the inability to raise prices during a period of weak commercial and consumer spending, companies have been left to trim their payrolls in order to realize some sense of profitability. While June's report sparks many to criticize the Administration’s stimulus program, employment reports are historically lagging economic indicators. Still, it appears that extra money that the consumer is receiving from any payroll tax cut is either being saved or used to reduce debt rather than being spent - counter to the key ingredient of the stimulus' presumptive plan.

 

The average work week fell to 33 hours, the lowest in more than 45 years while the average weekly hours worked by production workers increase to 39.5 hours. This sent average weekly earnings down about $1.85 per week to $611.49.

 

The report, along with pre-holiday preparation (markets are closed tomorrow for July 4th holiday), have sent stock prices and bond yields lower through mid-day trades.

 

Brian Turner

Director, Advisory Services

 

Review of This Week's Key Releases:
Tue, Jun 30-	S&P/Case-Schiller Home Price Index	Apr	-18.1% vs -18.7%
Wed, Jul 01-	ISM Manufacturing Index	Jun	44.8 vs 42.8
Wed, Jul 01-	Pending Home Sales	May	+0.1% vs +7.1% r
Wed, Jul 01-	Domestic Vehicle Sales	Jun	7.1M vs 7.4M
Wed, Jul 01-	Construction Spending	May	-0.9% vs +0.6% r
Thu, Jul 02-	Change in Non-farm Payrolls	Jun	-467k vs -322kr
Thu, Jul 02-	Unemployment Rate	Jun	9.5% vs 9.4%

 

Next FOMC Meeting:
Wed, Aug 12-	FOMC will balance long-term economic growth stability against upward inflationary momentum
	Current target rate -- 0.0% to 0.25%