The very sour national jobs report for June included only 57,000 new private jobs, a loss of 39,000 government jobs, and a 44,000 cut in previous estimates of April and May jobs, according to Jim Haughey, chief economist for Reed Construction Data, Norcross, Ga. Sixty percent of the new private jobs were in the very low-paying leisure and hospitality industry. Temporary service jobs dropped 10,000. 17,400 jobs were cut in the usually steady education sector. Public sector layoffs will continue into 2012 as the stimulus funds used to retain public jobs are exhausted. The June employment report is much more pessimistic than the slim job gain.
The jobs survey was done during the week ending June 18th. Since then, the balance of economic reports has been slightly positive, according to Haughey, including lower energy prices, higher stock market indexes, and fewer initial claims for unemployment insurance. It is more likely than not that the worst period is now behind us. If so, this only means that the overall spending pace has moved back to subpar and a brief period near-zero growth. The GDP outlook for the second quarter remains in the 1.5-2.0% range with only net foreign trade and inventory accumulation (some of it unwanted) keeping growth positive. Then GDP growth outlook for the 2nd half of 2011 is in the 2%-3% range. It will be in the bottom of the range if consumers and business owners and managers do not see an acceptable resolution to the debt limit crisis in the next three weeks.
The Reed Construction Data construction spending forecast has been cut further to a 5.2% decline in 2011 although it still expects construction spending to be rising beginning sometime during the summer.
