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July 2nd, 2009

June’s Job Report: Disappointing Yet Staying On Track

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Unemployment picked up sharply in June from May. According to the Bureau of Labor Statistics, 467,000 nonfarm jobs were lost last month and the unemployment rate rose to 9.5%.

The fact that layoffs increased by 145,000 from May to June, after falling by 197,000 from April to May, has many analysts disappointed with June’s report, urging that the numbers indicate our economic recovery, particularly pertaining to jobs, is far off.

However, when you look at the trend of not only layoffs but the unemployment rate as well, it suggests that May’s numbers may have been more of an anomaly than anything else. Taking May’s report out of the equation, June’s 467,000 still fits into the overall downward trend of unemployment. Furthermore, since January, the unemployment rate has increased an average of 0.45 percentage points each month, yet June’s rate only increased by 0.1.

Granted this isn’t cause for celebration of over-optimism, but it is an indication that the overall yearly trend of unemployment is moving downward.

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2 Responses to “June’s Job Report: Disappointing Yet Staying On Track”

  1. William Says: July 3rd, 2009 at 8:41 am

    Unemployment increased by only 0.1%? That would mean that the increase was nearly 5 times less than the previous month, which was 0.5%. So, June’s numbers would have to be less than 100,000. There is an error somewhere. It appears unemployment also increased by about 0.5% again in June. That would take us up to about 10% employment, not 9.5%. Am I missing something here?

  2. Tim Manni Says: July 6th, 2009 at 10:41 am

    William,

    How are you, thanks for commenting. You can’t really make the correlation that since 100,000 people lost their jobs, the unemployment rate should increase by 0.1%.

    The number of layoffs are determined via the payroll survey. The BLS contacts employers on a list (small, medium, and large businesses) and asks about their hiring/firing for the month. The unemployment rate is calculated via the household survey. Households are contacted and asked how many potential workers live there and how many are working.

    While the survey isn’t perfect, they are as good as they can be and have been the Federal point of reference since forever. That being said, it is a monthly survey. Monthly surveys can only contact a select group of individuals in the limited amount of time they have. Furthermore, there are always revisions to monthly report after just one month. I believe there are even yearly revisions and so on.

    Thanks for commenting, hope to hear from you again soon,
    Tim

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Tim Manni is the Managing Editor of HSH.com and the author of their daily blog, which concentrates on the latest developments in the mortgage and housing markets.

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