The labor market in the United States lost 467,00 jobs in June. But this was just the headline number as unemployment rose to 9.5%. Unfortunately, the deep dive shows a situation that mirrors this weakness.
Establishment Survey
Below is a snapshot of the Establishment Survey data over the last 18 months (click chart to enlarge).
What you should notice is that payrolls are shrinking at a faster rate both on a seasonally-adjusted basis (SA) and using the unadjusted data. We have lost 5.7 million jobs when one uses SA numbers. But, we have lost even more jobs – almost 5.9 million – when using the unadjusted data. Yes, we have seen jobs added on an unadjusted basis for three months now. But, this is largely due to seasonal trends. What is key is that we are adding fewer jobs at this time of year than we did last year – hence the accelerating decline in Non-Farm Payrolls.
And, of course, the Birth/Death model has added a huge number of jobs to the statistics in that time frame. Below are the Birth/Death statistics for 2009.
Wages were static from May to June.
Clearly, the labor market in the U.S. continues to be very weak.
Household Survey
When looking at the household survey, the weakness is also evident. I should point out that the U-6 level of unemployment, the Labor Department’s most comprehensive measure of unemployment is now a seasonally-adjusted 16.4%. It is 16.8% on an unadjusted basis.
Below is a table of the core unadjusted numbers derived from the household survey over the last 18 months.
Again, you should notice that the increase in the number of unemployed is accelerating.
If the U.S. gets more employment data of this sort, no sustainable recovery is going to be forthcoming. In order for my prediction of recover in Q4 or Q1 to occur (which is in a mere 3 to 9 months), I would like see the year-on-year change in the number of unemployed stabilize. However, I should caution that this is not a pre-requisite for a recovery. In 2001, not only was the unemployment rate increasing after recovery in November, but year-on-year comparisons were also increasing.
Nevertheless, it is hard to believe we could see a sustainable recovery without an increase in employment or wages.