There’s no nice way to say it. At face value, the June payroll report was a disaster.
Now to provide a little background, the Unemployment Rate report consists of two separate reports. First, about 60,000 households are surveyed to determine the unemployment rate. Then, approximately 375,000 businesses are surveyed to determine the number of nonfarm payrolls, average workweek and average hourly earnings figure. Together, these surveys make up the timeliest and broadest indicator of economic activity released each month.
To break it down, the Labor Department reported that 80,000 payroll jobs were created in June. Economists were expecting that 100,000 payroll jobs would be created for the month, so this was a disappointment. The other discouraging tidbit was that the average workweek rose marginally to 35.5 hours in June, up from 34.4 in May. I say discouraging because the average workweek needs to get to 37 to 38 hours to create more robust job growth.
The bottom line is that while these results were better than May’s abysmal turnout, it definitely put a damper on Friday’s trading action. The only silver lining to this is that this time last year, a disappointing jobs report would have probably sent the market down 300 points, so today’s 120 point move for the Dow is a much more reasonable reaction.
Other reports covering the jobs front have been more optimistic of late, but with the average workweek remaining this low and millions of long-term unemployed people, it looks like the U.S. will have a tough time creating jobs in the next few months.