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Strategies & Market Trends : John Pitera's Market Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: John Pitera who wrote (2530)	7/7/2000 9:16:39 AM
From: John Pitera	Respond to of 33421

U.S. Payrolls Post Smallest Gain In Four Years as Census Cuts Back Dow Jones Newswires July 7, 2000 WASHINGTON -- The economy created fewer jobs in June than at any time in the last four years. The Labor Department said Friday that nonfarm payrolls advanced by a smaller-than-expected 11,000 jobs in June as a decline in Census 2000 hiring nearly offset an increase in private sector jobs. Economists surveyed by Thomson Global Markets expected payrolls to jump by 293,000. Still, the unemployment rate fell as expected to 4% from 4.1% in May. And despite the weak job creation in June, wage pressures rose slightly. Average hourly earnings rose 0.4%, or five cents, during the month to $13.71. Economists expected to see earnings reach $13.69 an hour. The June payroll increase included a 206,000 boost in private-sector hiring, more than offsetting a 165,000 decline in May. But government offices reduced their payrolls by 195,000 during June after three months of large increases. The June decline was almost entirely attributable to a drop in Census Bureau hiring. Manufacturing payrolls rose by 8,000 jobs in June following a 12,000 decline in May. Since October of last year, the manufacturing industry has created 38,000 jobs. In the service industry, payrolls grew by 148,000 after a 17,000 gain in May. The June increase included a 54,000 advance among business services and a 49,000 boost in retail trade. During the first half of 2000, retail employment growth averaged 32,000 a month. The average work week grew by six minutes to 34.5 hours in June, as expected. -------------------- -----Payrolls rise just 11K, 201K ex-Census. The unemployment rate expectedly fell to 4.0% as hourly earnings rose an expected 0.4%. The average workweek rose to 34.5. The payroll figure is the only real surprise, but a good one for the bond market<?b>. Census layoffs of 190K was the real surprise with a 201K ex-census figure the trading point as it suggests mildly slower hiring despite a lower unemployment rate. 08:47 ET 30-year: +18/32..5.868%....GNMAs: +10/32....$-¥: 107.66 The debate continues whether the weak rise in payrolls is a supply or demand issue. That is, is it a lack of available workers in the labor force or the downturn in demand for workers which is driving it. The return to a 4% unemployment rate provides some rationale to the supply side while the recent slowdown gives the demand siders something to argue about. Bottom line is that the labor market remains extremely tight, labor costs are moderate given the 3.6% annual growth in earnings as the workweek rose suggesting some substitution for hours over employees. The ex-Census rise in payrolls of 201K is weak but not dead and still leaves the question of the August Fed policy directive in the air. We're on the fence and watching the data but given the slowdown (2% growth) in the last two second quarters the odds are that the Fed will take another 25 bp before the pre-election meeting in October. ------

To: John Pitera who wrote (2530)	7/7/2000 9:17:24 AM
From: John Pitera	Respond to of 33421

U.S. Payrolls Post Smallest Gain In Four Years as Census Cuts Back Dow Jones Newswires July 7, 2000 WASHINGTON -- The economy created fewer jobs in June than at any time in the last four years. The Labor Department said Friday that nonfarm payrolls advanced by a smaller-than-expected 11,000 jobs in June as a decline in Census 2000 hiring nearly offset an increase in private sector jobs. Economists surveyed by Thomson Global Markets expected payrolls to jump by 293,000. Still, the unemployment rate fell as expected to 4% from 4.1% in May. And despite the weak job creation in June, wage pressures rose slightly. Average hourly earnings rose 0.4%, or five cents, during the month to $13.71. Economists expected to see earnings reach $13.69 an hour. The June payroll increase included a 206,000 boost in private-sector hiring, more than offsetting a 165,000 decline in May. But government offices reduced their payrolls by 195,000 during June after three months of large increases. The June decline was almost entirely attributable to a drop in Census Bureau hiring. Manufacturing payrolls rose by 8,000 jobs in June following a 12,000 decline in May. Since October of last year, the manufacturing industry has created 38,000 jobs. In the service industry, payrolls grew by 148,000 after a 17,000 gain in May. The June increase included a 54,000 advance among business services and a 49,000 boost in retail trade. During the first half of 2000, retail employment growth averaged 32,000 a month. The average work week grew by six minutes to 34.5 hours in June, as expected. -------------------- -----Payrolls rise just 11K, 201K ex-Census. The unemployment rate expectedly fell to 4.0% as hourly earnings rose an expected 0.4%. The average workweek rose to 34.5. The payroll figure is the only real surprise, but a good one for the bond market. Census layoffs of 190K was the real surprise with a 201K ex-census figure the trading point as it suggests mildly slower hiring despite a lower unemployment rate. 08:47 ET 30-year: +18/32..5.868%....GNMAs: +10/32....$-¥: 107.66 The debate continues whether the weak rise in payrolls is a supply or demand issue. That is, is it a lack of available workers in the labor force or the downturn in demand for workers which is driving it. The return to a 4% unemployment rate provides some rationale to the supply side while the recent slowdown gives the demand siders something to argue about. Bottom line is that the labor market remains extremely tight, labor costs are moderate given the 3.6% annual growth in earnings as the workweek rose suggesting some substitution for hours over employees. The ex-Census rise in payrolls of 201K is weak but not dead and still leaves the question of the August Fed policy directive in the air. We're on the fence and watching the data but given the slowdown (2% growth) in the last two second quarters the odds are that the Fed will take another 25 bp before the pre-election meeting in October. ------