While jobs were created in June, the number was a statistically insignificant 18,000, effectively suggesting no change for the month. Adding insult to injury, the already weak May increase in nonfarm payrolls was cut in half. For the past two months, the economy is now estimated to have created a mere 43,000 new jobs.
The unemployment rate moved higher to 9.2%, its third consecutive monthly increase. The economy simply is not creating enough jobs to satisfy demand. The number of employed Americans fell by nearly 450,000 during June. Any way you slice it, the jobs market is struggling, and today’s report can’t be viewed as anything but a disappointment and a reaffirmation that the economy is struggling.
The pace of job creation had picked up and looked promising from February through April, when average monthly job creation reached 215,000. Since that time, the economy has continued to slow and consumer and small business confidence has slipped. Economists were looking for a much better result given the better than expected results in the ADP National Employment Report earlier this week. That optimism proved to be wishful thinking.
The economy is at a critical phase, as the expansion should be reaching a point at which job creation should be gathering momentum. Today, the economy is simply not growing at a pace that is sufficient to create enough jobs to meet the needs of the American workforce. The result is frustrating for those individuals who cannot find a job or are stuck in a part-time position rather than a full-time job.
We remain concerned about the near-term direction of the economy, but believe it is still too soon to definitively conclude whether this is simply a summer soft patch or the beginning of a more ominous deceleration. Incoming data over the next few months should be instructive in determining where the economy heads from here.