Friday, July 6, 2012

June Employment Report

The June employment report provides another set of data confirming that the economy is growing at a sluggish pace.  The US economy added 80,000 jobs in June and the unemployment rate remained at 8.2%.  The broad measure of unemployment (U6) rose slightly to 14.9%, above the recent low of 14.5% in March-April 2012. Depending on your perspective, you can view this as significantly below its high of 17.2% in October 2009 but above the low of 7.9% prior to the recession.
About half of the jobs created were in 2 industries: temp agencies added 25,000 jobs while food services and drinking added 15,000.  Local government added 4,000 jobs, but that masks some interesting dynamics.  Local education shed 14,000 jobs (seasonally adjusted) while local government added 18,000 jobs in other areas.  That builds on the trend from May during which local government eliminated 10,000 education jobs but added 5000 outside of education.

Though there are some problems with seasonal adjustments previously noted, employment growth declined significantly in the second quarter.  The chart below shows the growth in jobs by sector in the first and second quarters of 2012, along with the change in the growth (numbers are in thousands):

Private Education
State & Local Education
Professional/Business Services
Health Care
Wholesale/Retail Trade
Local Govt (non-education)

Most of the decline in employment growth took place in the private sector (decline of 404,000 compared to 48,000 in government).  Leading the slowdown were declines in job creation in leisure & hospitality and education (including both private & public education), each accounting for about 30% of the decline in employment growth.  While employment in leisure & hospitality went from robust to flat, education went from adding 63,000 jobs to losing 56,000.  Other sectors including manufacturing, professional/business services, and health care continued to add jobs, but at much slower rates while construction went from little growth to shedding jobs.  Two sectors that experienced more rapid job creation were wholesale/retail trade and, to the surprise of many, local government (aside from local education).  What does this imply?  The slowdown in job creation was broad based, reflecting a slowdown in the overall economy.