So much for that two-to-three-month improvement trend in the employment data—the decline in payroll employment reaccelerated in June: 467,000 jobs lost according to the employment situation report released this morning by the Bureau of Labor Statistics, more than just about any forecaster expected—and markedly worse than the 322,000 jobs lost in May. The unemployment rate didn’t budge much, rising from 9.4% to 9.5%. But the unemployment rate doesn’t tell you a lot at times like these. Here’s what the latest payroll numbers look like in my trusty chart:
This chart is getting to be somewhat pointless. We know this recession is much worse than the last five. I really will get cracking on the Depression-comparison chart (update: here it is), but I haven’t updated it in a few months so that’ll take a little while.
Payroll employment is not a leading indicator—that is, it’s not necessarily a signal of what happens next with economy. Yesterday’s Institute of Supply Management survey results had some forecasters (well, at least one that I saw: UniCredit’s Harm Bandholz) declaring that the recession was virtually over, and the Economic Cycle Research Institute weekly leading index, which has done an excellent job of calling turning points over the past few decades, appears today to have jumped into recovery territory (they don’t publish the index; I get their weekly e-mail). Maybe we are in a recovery, but
(1) it doesn’t feel like a very fun one
and
(b) the job market is so bad that it doesn’t seem impossible that households might soon have to embark on another round of belt-tightening that tips the economy right back into recession.
I’ll conclude with a summing up from the indispensable Ian Shepherdson of High Frequency Economics:
In short, labor market is still terrible; don’t be swayed by small unemp rise. Wages will soon be falling outright, a classic deflation signal.