467,000

The number of U.S. jobs lost in June

“The heavy job losses in June confirm that the road to recovery will be bumpy, but it does not yet indicate that we have gone off the track. Job losses had slowed sharply in May, to 322,000 from 519,000 in April. The question is, ‘Which month was the outlier, May or June?’ The answer is probably both — May on the upside and June on the downside. Job losses will continue throughout 2009, but at a diminishing pace, and the unemployment rate will peak at 10.3 percent in the first half of 2010,” says Scott Hazelton, IHS Global Insight’s senior principal, business planning solutions.

“Construction jobs fell by 79,000, more than in May (down 48,000), but these are still the first back-to-back declines of less than 100,000 per month since October 2008. Job losses in residential construction (down 31,000) and nonresidential construction (down 32,000) were evenly balanced. And there were 16,000 jobs lost in heavy and civil engineering construction, suggesting that fiscal stimulus has not yet had a big impact,” he says.

The private service sector, Hazelton says, lost 192,000 jobs, compared with 97,000 in May, and manufacturing cut 136,000 jobs in June, compared with 156,000 in May. “Manufacturing output has yet to hit bottom, but we believe that the inventory cycle will begin to turn in the third quarter and that manufacturing output will begin to rise, led by automobiles,” he says.

“State and local government employment fell by 3,000 and was essentially flat over the first six months of the year. Given the well-publicized budget problems at the state and local level, we expect to see their payrolls declining in the second half of the year, as their new fiscal year begins and budget cuts kick in,” he says.

“The report gave a cautionary warning about consumer incomes, as hourly earnings were flat. This, combined with the still-heavy loss of jobs, signals a continuing decline in overall wage and salary incomes, which is bad news for household purchasing power,” he says.