June 2011 Non-Farm Payroll Numbers - Disconnect between forecast & reported? You bet!


Non-farm payroll numbers for the month of June totaled 18,000 new jobs, versus expectations of 105,000 new jobs.  It would appear that there is a serious disconnect someplace between the forecasting and the reporting!

The unemployment rate for June edged higher to 9.2% from 9.1% in May.  The ADP reported an increase of 157,000 new jobs for the month of June versus expectations of 95,000 new jobs, which had the effect of lifting expectations for non-farm payroll jobs that did not materialize.  Revisions to jobs in April and May resulted in lowering these reports by 44,000 jobs.  Overall the tone of the economy reflects a jobless recovery that has been recently penalized with poor weather conditions and a weak economic environment related to the disaster in Japan.  Higher commodity prices have also hurt the confidence of employers to add to their payrolls.  Markets continue to struggle with weak job growth and will have to digest this report, which reflects the slow economic patch that we have been working through.  It is anticipated that growth in the U.S work force should gradually pick up as we approach the fall time frame.

Robert Floyd, CFA, is Lead Manager for BirchLeaf Investments (www.birchleafinvestments.com)