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Nation Adds a Weak 80,000 Jobs in June, Unemployment Rate Flat

The nation added 80,000 jobs in June, the ""Labor Department"":http://www.dol.gov/ reported Friday.

This makes job growth in the second quarter 225,000, the weakest quarterly gain in jobs since the third quarter of 2010 when the economy lost 136,000 jobs. The closely watched unemployment rate remained at 8.2 percent, unchanged from May.


Economists surveyed by Bloomberg expected payrolls to grow by 90,000 and the unemployment rate to remain at 8.2 percent.

Average weekly hours ticked up to 34.5 from 34.4 and average hourly earnings rose.

There were few positive signs in this report. Even the drop in the number of long-term â€" 27 weeks or more â€" unemployed was tempered by a sharp increase in those unemployed for 15 to 26 weeks, the “feeder” category to long term unemployed.

The unemployment rate for those without a high school diploma fell to 12.6 percent in June from 13.0 percent in May but the unemployment rate for those who completed college rose to 4.1 percent from 3.9 percent. Since college graduates are more likely to be home owners than those without a college degree, the increase in the unemployment rate could lead to a bump up in delinquencies, defaults and foreclosures.

The report â€" based on labor conditions such as employment, unemployment and payroll status for the week of the month including the 12th calendar day â€" showed weakness in the education and health services sector, typically a strong category, a gain of just 2,000 jobs. In the last year the sector has added an average of 39,000 jobs per month.

The good producing sector was also weak adding 13,000 jobs compared with an average monthly increase of 25,000 in the past 12 months â€" even with a loss of 21,000 goods producing jobs in May.

The manufacturing sector added just 11,000 jobs in June, down from an average of 19,000 in the last 12 months.

And the retailing sector dropped 5,400 jobs hinting at weaker retail sales which could have a broader economic impact since personal consumption accounts for almost 71 percent of the nation’s economy.

Two indicators of confidence in the report were also weak for different reasons. The number of re-entrants to the labor force -- those who had been on the sidelines but who now believe they can get work â€" fell 212,000, the steepest decline since May 2010. At the same time the number of temporary jobs increased 25,400, the strongest increase since February. Though often seen as a pathway to permanent employment, an increased use of temp workers also signals a lack of confidence by employers and a reluctance to make a permanent increase to staff.

Government was less of a drag on the payroll report than in previous months, shedding net 4,000 jobs â€" most at the local government level â€" compared with an average loss of 15,300 jobs per month in the past year.

The financial sector added 5,000 jobs in June , most new jobs â€" 4,700 â€" coming in the “credit intermediation” sector, underwriters. The number of real estate jobs grew by 2,800.

The percentage of part time workers of total employment, which had increased in May, dropped to 19.6 percent in June.

The number of unemployed of persons unemployed rose to 12,749,000, the third increase in the last five months after declining for five straight months.

The number of people employed according to the household survey â€" one of two used to produce this report â€" was 142,415,000 â€" above the 141,687,000 when President Obama took office. The total number of jobs according to the separate establishment survey, was 133,088,000 above the 132,837,000 in January 2009. The working age population in that span has grown 8,242,000

Payroll gains for April and May were revised with offsetting changes: The previously 68,000 job gain in April was increased to 77,000 but the increase of 77,000 jobs in May was lowered to 69,000.

Even with the disappointing numbers, the report continued a string of increases in payroll jobs â€" the 21st straight month of job gains but fell woefully short of population growth. To keep up with population growth though the economy has to add between 140,000 and 150,000 jobs per month.

Just as the unemployment rate was flat, the employment-population ratio, unconstrained by technical definitions of unemployment remained at 58.6 percent. The inverse of the ratio â€" 41.4 percent â€" can be considered the “unemployment rate” for all persons over 16 regardless of whether they are available or looking for work. The ratio was 62.7 percent when the recession began and 60.6 percent when President Obama took office in January 2009.

The formula for the unemployment rate is to divide the number of people officially counted as unemployed (out of work, available for work and looking for work) by the total labor force (employed plus unemployed). If the labor force change is driven by a drop in unemployment, the unemployment rate will decline. In May, the drop was due to a decline in both employment and unemployment. In June the modest increase in the labor force was driven mainly by an increase in employment.

The closely watched alternate measure of unemployment â€" which includes individuals working part time for economic reasons and those “marginally attached” to the labor force â€" rose to 14.9 percent in June from 14.8 percent in May.

The numbers of job-leavers, often an encouraging sign suggesting workers have confidence in their ability to find a new job, dropped in May for the second straight month.

The unemployment rate for the prime home-buying age cohort â€" 25 to 34 â€" remained at 8.2 percent in June â€"while the unemployment rate for those over 55, generally the prime home-selling age cohort, dropped to 6.2 percent in June from 6.5 percent in May.

About Author: Mark Lieberman

Mark Lieberman is the former Senior Economist at Fox Business Network. He is now Managing Director and Senior Economist at Economics Analytics Research. He can be heard each Friday on The Morning Briefing on POTUS on Sirius-XM Radio 124.

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