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Another Weak U.S. Jobs Report

07/06/2012

June payrolls increased +80,000, below consensus estimates of +100,000. Private sector jobs gained +84,000, again below estimates of +105,000. The unemployment rate was unchanged at 8.2%.
 
•   The May payroll figure was revised higher from +69,000 to +77,000
•   The May private sector figure was also revised higher from +82,000 to +105,000 
•   The underemployment rate increased to 14.9% from 14.8%
•   Average hourly earnings rose to $23.50 from $23.44 last month
•   The average work week rose to 34.5 hours from 34.4 hours last month
•   Education and health employment rose only +2,000, well below last month’s +44,000
•   Temporary jobs rose +25,000, higher than last month’s +19,000
•   Services jobs rose +67,000, down from last month’s +98,000
  
COMMENTARY: These figures land in the most disappointing place for FOMC policy makers - not weak enough to signal a recessionary environment, nor strong enough to suggest anything other than pedestrian 2% GDP growth, at best. The market impact will be continued U.S. dollar strength as current European monetary policy is easing far more aggressively to fight multiple confirmed euro zone recessions. It will be interesting for investors next week to gain an understanding of just how the recent second quarter rise in the U.S. dollar has impacted corporate earnings.
 
For the upcoming U.S. Presidential election, Republican candidate Mitt Romney once again receives the ball on President Obama’s 40 yard line.  To date, Candidate Romney has not been able to capitalize on the favorable field position in the polls. Therefore, markets still cannot price in a Presidential election outcome.
 
Finally, they say a picture is worth a thousand words. Not sure if the charts below reach that limit, but they are intriguing in gauging where 2012 ranks in terms of private sector job growth since 1999. Not recessionary but not ordinary either.
 
U.S. PRIVATE SECTOR JOBS WEAKEST READING SINCE THE AUGUST 2011 REPORT

Source:  Bloomberg

U.S. PRIVATE SECTOR JOBS YEAR TO DATE 2012 – AVERAGE 158,670

Source  Bloomberg

U.S. PRIVATE SECTOR JOBS YEAR TO DATE 2011 – AVERAGE 175,420

Source:  Bloomberg

U.S. PRIVATE SECTOR JOBS YEAR TO DATE 2010 – AVERAGE 104,000

Source:  Bloomberg

U.S. PRIVATE SECTOR JOBS YEAR TO DATE 2009 – AVERAGE (415,330)

Source:  Bloomberg

U.S. PRIVATE SECTOR JOBS YEAR TO DATE 2008 – AVERAGE (315,170)

Source:  Bloomberg

U.S. PRIVATE SECTOR JOBS YEAR TO DATE 2007 – AVERAGE 67,670


Source:  Bloomberg

U.S. PRIVATE SECTOR JOBS YEAR TO DATE 2006 – AVERAGE 154,920

Source:  Bloomberg

U.S. PRIVATE SECTOR JOBS YEAR TO DATE 2005 – AVERAGE 192,670

Source:  Bloomberg

U.S. PRIVATE SECTOR JOBS YEAR TO DATE 2004 – AVERAGE 159,170

Source:  Bloomberg

U.S. PRIVATE SECTOR JOBS YEAR TO DATE 2003 – AVERAGE 10,500

Source:  Blooomberg

U.S. PRIVATE SECTOR JOBS YEAR TO DATE 2002 – AVERAGE (64,830)


Source:  Bloomberg

U.S. PRIVATE SECTOR JOBS YEAR TO DATE 2001 – AVERAGE (192,670)

Source:  Bloomberg

U.S. PRIVATE SECTOR JOBS YEAR TO DATE 2000 – AVERAGE 140,330

Source:  Bloomberg

U.S. PRIVATE SECTOR JOBS YEAR TO DATE 1999 – AVERAGE 226,080

Source:  Bloomberg

Virtus Investment Partners provides this communication as a matter of general information. The opinions stated herein are those of the author and not necessarily the opinions of Virtus, its affiliates or its subadvisers. Portfolio managers at Virtus make investment decisions in accordance with specific client guidelines and restrictions. As a result, client accounts may differ in strategy and composition from the information presented herein. Any facts and statistics quoted are from sources believed to be reliable, but they may be incomplete or condensed and we do not guarantee their accuracy. This communication is not an offer or solicitation to purchase or sell any security, and it is not a research report. Individuals should consult with a qualified financial professional before making any investment decisions.