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The 62,000 decline in U.S. nonfarm payrolls, along by a pop in weekly initial jobless claims, bolsters the case for recession

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By BusinessWeek and Standard & Poor’s stay

The June employment report was bad, but by the market’s reckoning, it could have been a lot worse.

According to a Labor Dept. report released upon July 3, U.S. payroll business fell an extra 62,000 in June, the sixth consecutive decline in jobs, while the unemployment standard held constant at 5.5%. The results were slightly worse than the market consensus for a 58,000 payroll drop and a 5.4% unemployment rate.

May’s decline in payrolls was revised upward to 62,000, from –49,000 previously. There was a net –52,000 revision above the former sum of two units months, including April’s 67,000 decline (revised from –28,000).

While the report landed in the general ballpark of Street expectations, it appears more in the market were bracing for worse results. U.S. stock futures moved higher after the release of the report, as did the dollar, during the time that prison prices moved lower.

Looking at the other components of the report, average hourly earnings rose 0.3%. Average weekly hours held at 33.7.

Manufacturing trade dropped 33,000, despite a gain of 6,000 in motor vehicles because of the end of the American Axle deal, and construction plunged 43,000, reflecting the continued weakness in housing. Service-producing industries lost 22,000 private jobs, under which circumstances direction employment rose 29,000. Temporary services jobs dropped 30,000, important since this is often a capital indicator for the overall job market. However, in June it also reflects a lack of summer jobs for students.

"Overall, a negative report but only slightly more negative than expected," said S&P Economics in a July 3 catalogue. "It confirms we are in [a] recession."

The weekly beginning jobless claims figures were released on the like day as the employment report (the jobs report was moved a daytime against us of its wonted Friday release because of the July 4 holiday). Initial claims for unemployment insurance benefits rose 16,000 in the week ending June 28, to 404,000. The market had expected a flat reading at 380,000. The four-week average of claims rose 11,250, to 379,250.

Unemployment claims over 400,000 for month are in a file consistent with recession, said S&P Economics. "This had been the last labor market indicator not in recession range."