More workers than there are people in all of Miami were put out of work in June, a development that surprised economists and sent U.S. financial markets into a tailspin. The Bureau of Labor Statistics reported that 467,000 jobs were lost last month, pushing the unemployment rate to 9.5 percent, a 26-year high.
A Bloomberg survey before the numbers were released this morning said economists were expecting a decline of about 367,000 jobs. Other surveys suggested an even lower number. Either way, the report was bad news and investors reacted by selling stocks, pushing prices lower the day before U.S. markets close in observance of Independence Day.
Monster Worldwide, which makes its money when companies are hiring, lost $1 on the earnings report. It was trading at $10.92 a share at midday in New York.
The job loss barely nudged the unemployment rate, which rose only one-tenth of a point from May. That suggests discouraged and long-time unemployed workers are taking themselves out of the labor market.
The BLS report says: “The number of long-term unemployed (those jobless for 27 weeks or more) increased by 433,000 over the month to 4.4 million. In June, 3 in 10 unemployed persons were jobless for 27 weeks or more.” These are still included in the unemployment rate. However, the report notes that about 2.2 million more Americans are out of work, want to work, but have grown so discouraged that they have largely given up. These workers are not included in the unemployment figures.
When discouraged workers are included in the calculations, the unemployment rate is actually 10 percent nationally.
The unemployment rate is likely to rise as jobs continue to be shed. Christina Romer, chair of the President’s Council of Economic Advisers, told CNBC, “Employment and unemployment are lagging series. So we are in for some more job losses.”
Most of the other indices that track jobs and public confidence support Romer’s view. The Monster Index, released the other day, was essentially flat from May, while the number of jobs posted online declined after a robust jump the month before. Consumer confidence was down about 10 percent from the previous month.
In the BLS report itself there is evidence that while monthly job losses have eased since the winter, the economy is not yet in recovery. The average workweek is now at the fewest hours since the data was first collected in 1964. On average, those production and non-supervisory workers still employed are putting in only 33 hours a week. That’s due to furloughs, reduced hours, and shortened workweeks, which have the effect of cutting wages, even though the government reports that hourly income has increased 2.7 percent in the last year.
Job losses were worst in the manufacturing sector, where the auto industry slump was largely responsible for the decline of 136,000 jobs. The professional and business services industry contributed 118,000 losses in June, while the construction industry shed 79,000 jobs. The balance came from retail, information (which includes the publishing industry and is not just IT), and finance.
Health care added 21,000 jobs in June.