Unemployment Rate Jumps to 6.4%
June nonfarm payrolls declined 30,000, while the unemployment rate jumped to 6.4% from 6.1%. Rounding out the report was the workweek holding at 33.7 hours and hourly earnings rising 0.2%.
The only big surprise relative to expectations was the unemployment rate. And even here, this jump leaves the series more in-line with the weakness that has been evident in payrolls and claims over the last year. While we would caution against viewing this report as an indication that labor market conditions have gotten worse, it is clear that there is still no sign of a pick-up in net hiring.
As for the industry breakdown, weakness was again led by goods-producing industries, which lost 40,000 jobs -- with manufacturing dropping 56,000. But, private-service industries continued to provide some support, rising 9,000. Health care was again a standout, rising another 35,000. Government payrolls also rose 1,000 after declining the past three months.
Overall, the bottom-line remains that hiring lags activity. And given that as of yet, we have seen little acceleration in activity, it should come as no surprise that this report suggests ongoing weakness. Nonetheless, hopes for a better second-half should limit the degree of weakness going forward.
In other economic news Thursday, the ISM Services index surged to 60.6 in June from 54.5 in May, and is up over 10 points the last two months. It's the best level since September, 2000.
Key components showed impressive gains with new orders rising to 57.5 from 50.6 and employment climbing to 50.3 from 48.7. Prices rose to 51.4 from 49.6.
From MMS International