Nonfarm Payrolls Disappoint

Nonfarm payrolls declined 467,000 in June, which was worse than the 350,000 job losses economists were expecting. The unemployment rate ticked higher to 9.5%, the highest level since August 1983. Curiously, 1983 was the year of Michael Jackson, who had three number one songs that spent 15 weeks at the top of the charts. So I'd like to dedicate this month's employment report to the one-gloved wonder who just passed away. While emulating the economic environment of the early 80's is nothing we should aspire to, at least Michael Jackson was on his game, moonwalking and cranking out the pop hits, before he ruined my childhood memories by creeping into the weird and controversial figure he would later become.

Not much silver lining in this employment report, for those still clinging to the story of our great recovery in the second half. The rate of unemployed or underemployed workers hit 16.5%, up from May and the average workweek was down 0.1 hour at 33 hours, a record low. An informed friend of the blog points out that every .1 hour decline is equal to roughly 350-500k jobs lost, so the continuing decline in the average workweek bodes ill for the recovery in the labor force.

The equity markets are not taking this news well after shrugging off a fairly significant amount of weak data this week. Auto sales remained below 10 million units annually for June, and construction spending declined in May. The MBA refi index showed that refinance applications were down 30%, which is not surprising given that interest rates have shot up recently. But the green shootists were all about the ISM, which showed further contraction in manufacturing, albeit at a slower pace.

After all of this sobering economic data, I propose that everyone go out and enjoy a few drinks and a barbecue this Fourth of July weekend. We can all start looking for jobs on Monday.