Economic Indicators Week of July 8th 2011

8/6/2019 Economic Indicators Week of July 8th 2011

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As of July 8th,2011


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Employment SituationReleased on 7/8/2011 8:30:00 AM For Jun,2011 Prior Consensus Consensus Rang ActualNonfarm Payrolls -M/M change 54,000 105,000 65,000 to 160,000 18,000 Unemployment Rate -Level 9.1 % 9.0 % 9.0 % to 9.2 % 9.2 % Average Hourly Earnings -M/M ch 0.3 % 0.2 % 0.1 % to 0.2 % 0.0 % Av Workweek - All Employeeshrs Private Payrolls - M/M change 83,000 125,000 100,000 to 183,000 57,000

HighlightsToday's employment report is abysmal. We have had two months in a row of essentially no growth. Nonfarmpayroll employment in June slowed to a crawl with an 18,000 gain, following a revised 25,000 rise in May, andrevised 217,000 in April. The market median forecast was for a 105,000 boost. Also, the April and May revisionswere down net 44,000. Once again, the government sector held down payroll numbers as private nonfarmpayrolls outpaced the total with an increase of 57,000 in June, following a 73,000 advance in May. Analysts hadprojected a 125,000 gain in June.

Most major industries were little changed. Goods-producing jobs edged up 4,000, following a 3,000rise in May. Manufacturing jobs rebounded 6,000 after a 2,000 dip in May. However, constructiondeclined 9,000 after decreasing 4,000. Mining advanced 8,000, following 9,000 gain the prior month.


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Growth in private service-providing jobs slowed to a rise of 53,000 after a 70,000 increase the priormonth. Leading the increase in June was leisure & hospitality, up 34,000 with professional &

technical services, up 24,000. Health care continued to trend upward with a 14,000 boost. On thedownside, standouts were educational services, down 17,400; financial activities, down 15,000; andtemp help, down 12,000.

The government sector shed another 39,000, following a 48,000 drop in May. This latest decreasewas led by local government but declines were also seen at state and federal levels.

Average hourly earnings also slowed June, coming in at no change, following a 0.3 percent rise theprior month. The consensus forecast was for a 0.2 percent increase. The average workweek for allworkers in June slipped to 34.3 hours from 34.4 the month before. The June figure came in lowerthan the market projection for 34.4 hours.

On a year-ago basis, overall payroll jobs in June improved to a still soft 0.8 percent from 0.6 percent

the previous month.

From the household survey, the unemployment rate edged up to 9.2 percent from 9.1 percent inMay. The consensus expected 9.0 percent.

The June jobs report reinvigorates the argument that the economy is in a soft patch. While a numberof indicators have picked up strength, employment is key for the consumer sector to add toeconomic growth. On the news, equity futures dipped significantly, bond prices firmed, and crude oil

declined.


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Market Consensus Before AnnouncementNonfarm payroll employment in May grew a modest 54,000, following a revised 232,000 jump in April and a

194,000 increase in March. Sluggishness in payroll jobs was broad based. Private nonfarm payrolls advanced83,000 in May, following a 251,000 increase in April. Government jobs contracted 29,000, following a 19,000 dipin April. This latest decrease was largely local government, led down by local government education. On apositive note, wage growth improved in May as average hourly earnings rose 0.3 percent, following a 0.1 percentuptick in April. The average workweek for all workers in May held steady at 34.4 hours. Turning to the householdsurvey, the unemployment rate nudged up to 9.1 percent from 9.0 percent in April. Household employmentactually rose 105,000 for the month but was outpaced by a 272,000 gain in the labor force.

DefinitionThe employment situation is a set of labor market indicators based on two separate surveys in thisone report. Based on the Household Survey, the unemployment rate measures the number ofunemployed as a percentage of the labor force. Other key series come from the EstablishmentSurvey (of business establishments). Nonfarm payroll employment counts the number of paidemployees working part-time or full-time in the nation's business and government establishments.The average workweek reflects the number of hours worked in the nonfarm sector. Average hourlyearnings reveal the basic hourly rate for major industries as indicated in nonfarm payrolls.


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During the mature phase of an economicexpansion, monthly payrolls gains of 150,000or so are considered relatively healthy. In theearly stages of recovery though, gains areexpected to surpass 250,000 per month.

The civilian unemployment rate is a laggingindicator of economic activity. During arecession, many people leave the labor forceentirely, so the jobless rate may not increaseas much as expected. This means that thejobless rate may continue to increase in the

early stages of recovery because morepeople are returning to the labor force asthey believe they will be able to find work.The civilian unemployment rate tendstowards greater stability than payrollemployment on a monthly basis. It revealsthe degree to which labor resources areutilized in the economy.


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As of July 7th,2011


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Jobless ClaimsReleased on 7/7/2011 8:30:

00 AM For wk7/2, 2011 PriorRange ActualNew Claims -Level 428 K 420 K 405K to435K 418 4-week Moving Average - Level426.75 K424.75 K

Highlights

Incremental improvement is the conclusion for weekly claims data, headlined by a 14,000decline for initial claims in the July 2 week to 418,000. The improvement is offset slightly by anupward revision of 4,000 in the prior week to 432,000. Results for an unusually large number ofsix states had to be estimated due to the July 4 holiday while Minnesota shows a 2,500 rise

related to the state's government shutdown. The four-week average is down 3,000 to 424,750yet, over the last several weeks, shows little change from levels in June

.

Continuing claims for the June 25 week fell 43,000 to 3.681 million. Continuing claims have beenslowly trending lower with the four-week average of 3.705 million down about 20,000 from the month-ago comparison. The unemployment rate for insured workers is down one tenth to 2.9 percent.

Initial claims have been steady at a stubbornly high level above 400,000 which doesn't point to robustresults for tomorrow's employment report. Yet this report is a slight positive for the economic outlookand also helps to confirm strength in today's ADP report.


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Market Consensus Before AnnouncementInitial jobless claims for the June 25 week nudged down only 1,000 to 428,000. The four-week average, up 500 in

the week to 426,750, showed no change from the May 28 week.Definition

New unemployment claims are compiled weekly to show the number of individuals who filed forunemployment insurance for the first time. An increasing (decreasing) trend suggests a deteriorating(improving) labor market. The four-week moving average of new claims smoothes out weeklyvolatility.

Weekly series fluctuatemore dramatically thanmonthly series evenwhen the series are

adjusted for seasonalvariation. The 4-weekmoving average gives abetter perspective on theunderlying trend.


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Economic Indicators Week of July 8th 2011