US Employment Indicators

According to the Bureau of Labor Statistics (BLS), payroll employment rose only 18,000 during June. May’s gain was also disappointing at 25,000, which was a downward revision from 54,000. Those were both far weaker than April’s increase of 217,000, which was also revised down from 232,000. Were there any disappointing months during the previous economic expansion? Yes there were. In 2004, payroll employment rose only 43,000 in February and 47,000 in July. In 2005, the weakest increase was 63,000 in September. In 2006, there was a small 11,000 gain in May and an 8,000 decline in October.

The index of aggregate hours worked in private industry fell 0.3% overall during June. It was led by a 0.7% drop in manufacturing, which was the first one-month decline since December. Again, a temporary shortage of parts had to be the culprit. Despite June’s decline, the three-month average of the index of aggregate hours worked was still up 3.3% (saar) during Q2 vs. Q1. Normally, that would suggest that real GDP probably rose at least as fast, and probably faster if productivity increased during the quarter. Nevertheless, we are sticking with our conservative projections of 2% for both Q2 and Q3, with a jump of 4% or more during Q4.