The employment data for June was far from good, but also was not as bad as many estimates. You can gleam some good news if you want but the "less bad" stance sure seems more appropriate.
The nominal unemployment rate came in at 5.7% versus 5.6% estimates, which is the highest level since early 2004. The report on non-Farm payrolls shrunk by 51,000 jobs, but estimates were for a drop of 75,000 jobs. Average hourly earnings rose 0.3% to $18.06 per hour, which is about as far behind inflation as you could imagine. Another piece of data showed that total employment fell by about 72,000 jobs and unemployment rose by 285,000. That is what accounted for the gain in unemployment.
The media is calling this better than expected on the surface, butcelebrating here sort of brings to mind the doctor visit where he tellsyou that you don’t have cancer but he can’t tell what you are sick frombecause he’s never seen it before.
Futures have recovered marginally in pre-market trading, but the key word is marginally.
Jon C. Ogg
August 1, 2008