The latest Employment Situation report from the Bureau of Labor Statistics shows non-farm payroll employment increased by 80,000 jobs in June. Note that prior payrolls were revised down for April (from +77,000 to +68,000) but up in May (from +69,000 to +77,000). The meager gain was fairly broad-based, both goods producing and service producing employment increased. Professional and business services posted the largest gain, +47,000 with more than half (25,200) coming from temporary help services. The decline in Government employment moderated a bit, declining by 4,000 jobs. Further, there was also a setback in the diffusion index (that measures the percent of industries with expanding employment plus one half of the industries with no change) from 59.8 to 57.9–after two months of consecutive increases.
After slowing down sharply early in 2012, the labor market has remained very sluggish, reflecting a lot of uncertainty on the part of employers. This is completely consistent with the disappointing growth in the economy. It would be hard to argue that the employment numbers and the details of labor market flows reflect an economy that is recovering. A particularly dispiriting indicator are the flows from unemployment to employment. After 5 straight months of positive gains at the end of 2011, the first 6 months of 2012 have completely erased that progress. Compared to the peak, the transition rate from unemployment to employment remains 10 percentage points below.
The unemployment rate was unchanged at 8.2%, as was the labor force participation rate (63.8%) and the employment to population ratio (58.6%). In light of the past several weak jobs reports, we look at some likely (and unlikely) scenarios for the state of the labor market come the November elections. Using the Atlanta Fed’s Jobs Calculator , we ask how many new additions to monthly payrolls are needed to bring the unemployment rate down to x% by the November elections.
- To remain at 8.2% unemployment in November, the economy needs to create 99,111 jobs per month.
- To reach 8% unemployment by November, the economy needs to create 171,815 jobs per month.
- To reach 7.5% unemployment by November, the economy needs to create 353,575 jobs per month.
- To reach 7% unemployment by November, the economy needs to create 535,335 jobs per month.
If the weak labor reports continue, the most likely scenario will be an 8.2% unemployment, if not more, by elections.
On the positive side, average weekly hours increased from 33.7 to 33.8, as did hourly earnings from $19.69 to $19.74.
