June Non-Farm Payrolls: Above Forecasts But Still Anemic

Includes: AGG, DIA, SPY
by: William Trent, CFA
According to Reuters, June job growth tops forecasts:

Employers added a stronger-than-expected 132,000 new jobs in June and also boosted payrolls more strongly than previously thought in April and May, according to a Labor Department report that underlined a strengthening job market.

Just because economists have low expectations does not mean that higher numbers are a sign of strength. When I look at the year/year change in employment levels, not seasonally adjusted, the current growth rate of about 1.4% looks neither strong nor strengthening.


Classifying the report within my economic taxonomy, however, is tricky. 1.4% doesn’t look good so I am going with bad. But really looking at the last several months the trend is flat, while I offered space for only deteriorating or improving. Since the June growth was (slightly) worse than May’s, I am going with deteriorating. This decision is also due to the fact that more than 100% of the reported change in employment is due to assumptions (the Birth/Death Model) rather than reported data.


Bad and Deteriorating Bad but Improving Good but Deteriorating Good and Improving
Existing Homes (May) Chicago Fed NAI (May) Consumer Confidence (June) Real Disposable Income
Store sales (June 30) Durable Goods (May) Personal Spending ISM Manufacturing (June)
New Home Sales (May) Construction Spending   ISM Services (June)
ATA Truck Tonnage (May)      
GDP (Q1 Final)      
Employment (June)