Today's Employment Situation Report from the BLS indicated that 224,000 jobs were added in June while unemployment rose slightly from 3.6% to 3.7%. Economists had expected 160,000 jobs and 3.6% unemployment, so the first number is encouraging and the second marginally disappointing.
This was a highly-anticipated release due to the well-under-forecast 75,000 jobs added in May. The question, of course, was whether or not that lackluster performance should be taken as an indication that the longest expansion in history might be nearing an end. Nor had that been the only concern, with evidence emerging that consumer confidence is waning. One may wonder how this is possible given the extremely low unemployment rates. However, wage growth continues to be sluggish and debt levels very high.
On top of all this is the fact that Wednesday’s ADP June employment report fell short of expectations at 102,000 jobs added (compared to a forecast of 120,000). Furthermore, there is some concern that those data show that small businesses, those most likely to shed jobs first in a downturn, are doing just that. One forecaster suggested that the emerging pattern was very similar to that preceding the Great Recession.
All that said, unemployment nevertheless remains very low and the stock market is booming. And although I personally don’t take the latter to be terribly significant, the far more important Real Gross Private Domestic Investment continues to increase. A glance at the data on this page makes it clear that while there have been declines in the series without recessions following, there have not been recessions without a decline in the series. This has not yet transpired and to me offers the greatest hope.
In short, evidence continues to be mixed. But perhaps this is not surprising given that this expansion is not only the longest in history, but also the weakest since World War Two. Things were already mixed to start with.
