Expected June Jobs Rebound Fails To Materialize

When the stock market began to rally off its lows late last month, many traders attributed it to growing optimism that the economy was producing more jobs. But according to the U.S. Labor Department, that isn't happening.

The government reported today that the unemployment rate rose to 9.2 percent in June as the month's job growth was anemic at best, with the economy adding just 18,000 jobs – the worst showing since September. Wall Street analysts had forecast growth of at least 100,000 new jobs during the month.

“The June employment data were stunningly weak,” said economist Joel Naroff, of Naroff Economic Advisors, in Holland, Pa. “Job gains were the lowest since last September when payrolls declined. Given the measurement error, you cannot even say that any new hiring occurred in June.”

To make matters worse, the employment numbers for April and May were revised downward. In the case of May's employment, that means it was even worse than the 54,000 new jobs first reported. Despite all the optimism building up to today, Naroff said the disappointing jobs report is not all that surprising.

"Discouraging trend"

“That is consistent with the surveys coming out of the National Federation of Independent Business and is a discouraging trend since that is where most of the hiring occurs,” Naroff said.

“Interestingly, there were almost no sectors that showed any strong gains but only a few industries cut sharply.  Temporary workers, which usually rise when job growth is solid, declined.  Firms often start off by hiring temps before determining they need permanent workers and that didn'?t happen.”

Wall Street registered its disappointment in the jobs report by selling off sharply in early trading. Gold and oil prices also fell sharply as traders began to take a harder look at those rosy growth estimates for the second half of the year.