As with the prior month’s surge, today’s report by the Labor Department that overall employment fell by 125,000 in June was driven by wild swings in temporary employment to conduct the decennial census. After rising over 400,000 in May, temporary Census jobs fell 225,000 last month. Stripping away government employment, June private sector employment shows that the economy has downshifted into low gear. After accelerating through the first four months of the year, private sector employment edged up just 32,000 in May and 83,000 in June according to today’s report.
The private sector employment growth in June is welcomed, however it is not hot enough to light any fireworks. Cautiousness to hire workers at a stronger pace shows that employers believe a self-sustainable economic recovery is not as strong as it was a few months ago, this is evidenced by the fact that the unemployment rate remains very high at 9.5 percent.
For the manufacturing sector, today’s report was both good and bad. On the positive side, manufactures increased employment for a sixth consecutive month in June. Through the first half of the year manufacturers added 136,000 jobs, accounting for nearly a quarter of private sector job growth so far this year. This was also the largest number of jobs added over a six month period by manufacturers in a dozen years.
The bad news was that the 9,000 gain in June was smallest increase so far this year and was not very wide-spread. Outside of fabricated metals and machinery, which accounted for all of the job increases in manufacturing last month, most industries reduced employment modestly. Today’s report is consistent with a number of regional manufacturing surveys which showed that manufacturing activity slowed down across the country last month. Part of the slowdown is being driven by a number of government stimulus programs that have either expired or are slowing down. The deceleration in private sector job growth over the past several months is a concerning signal that the economic recovery is hitting a rough patch at mid-year.