Friday morning saw the release of June’s employment report from the BLS. Wall St officially expected 110K new private payroll jobs created and a 200K loss in US Census workers, for a total net 90K total jobs lost in June..
The BLS report was (even) weaker :

  •  +83K new private payroll jobs created (lower than the 110K expected) 
  • -225K census jobs lost (more than 200K expected)
  • +17K new federal, state & local govt jobs other than census
  • =  -125 K TOTAL jobs lost .
  • initial unemployment claims rate 9.5 %.

This is another very weak jobs report. Reiterating the point I made previously, our $14.5T economy has 300M people and needs 125K new jobs per month just to maintain near record high unemployment. So a 125K loss -even with an +83K new private jobs is not what an economic recovery looks like. It is a quarter of a million jobs short of breaking-even economy, and over 400K jobs shy of firing on all cylinders.  Since the US stock market is still pricing-in a robust recovery with 300K new private jobs per month, it would be fair to say the US stock market remains over-priced by 15-20% even though it has lost 16% in the past couple months. Again, Dow 8000 looks about right. 

The Bureau of Labor Stats said the US labor force declined by 650,000 in June. If that statistical trickery were removed, the headline unemployment rate for initial claims would have been 10%. But the BLS is somehow in the game of massaging data and as a result, the headline unemployment rate -which is only initial claims — was 9.5% –a drop from last month’s 9.7%. If this trend continues, statistical black magic will make it seem like things are getting better as initial claims rates drop to much less headline-grabbing lofts, but there will be millions of Americans not represented in that data because they’ve exhausted their unemployment insurance and are a dead-weight to the economy. 

The BLS has 2 key months reports. The non-farm payrolls report –that gets most of the publicity — and the household survey report. Of the two reports, the household survey report better reflects what is going on with small business. Get ready for this: the household survey report showed small business laying off 300,000 people in June. Small business has always been and always will be the engine that drives the US economy. I grant the usually employment is an economic lagging indicator, but a 300K job loss in 1 month is very troublesome. It’s odd that the headlines aren’t all over this point.

On the whole, a very weak employment report.