Transcripts

The Payrolls Continue To Take Deep Cuts

SUSIE GHARIB: Bad news today for job seekers as American businesses cut jobs from their payrolls for the sixth straight month. The Labor Department reported that U.S. payrolls fell by 62,000 in June. Today's report is more evidence that consumers and the economy are being pressured by the combination of declining employment, rising energy prices and falling home values. Scott Gurvey reports.

SCOTT GURVEY, NIGHTLY BUSINESS REPORT CORRESPONDENT: There is no question the U.S. economy is in a funk. While the loss of 62,000 jobs in June was far short of the numbers usually seen in a recession, it was the sixth month in a row payrolls have been cut. Job losses for the year now total 438,000. Wall Street was particularly interested in the unemployment rate, which had jumped a whopping 0.5 percent in May. Some of that increase was attributed to seasonal adjustment factors. But the rate held steady at 5.5 percent in June. Economist Anthony Chan of JPMorgan says that is a distressing sign.

ANTHONY CHAN, CHIEF ECONOMIST, JPMORGAN PRIVATE CLIENT SERVICES: I think the fact that the unemployment rate held steady does suggest to me that there is a lot more weakness in the labor market than the non-farm payroll numbers would suggest. And, in fact, you've got some confirmation of that in the weekly initial unemployment claims. Those numbers are continuing to shoot higher, suggesting that in future months, we're going to see even greater weakness in these labor numbers.

GURVEY: Those weekly unemployment claims numbers rose above 400,000 last week. Economists consider that a key level. The four week average is now at levels not seen since hurricane Katrina struck in 2005. About the only parts of the economy posting job gains in June were related to health care, business technical -- that would be companies trying to increase productivity -- and surprisingly, leisure and hospitality. Economists say that's probably people spending their stimulus checks. But Barclays Capital's Dean Maki says it's also because the economy, while unquestionably sluggish, is still growing.

DEAN MAKI, CHIEF US ECONOMIST, BARCLAYS CAPITAL: We grew at a 1 percent pace in the first quarter. We think we're going to see a similar kind of pace in the second quarter when the data come out later in the month. So the economy is growing. It's not contracting in the way that it does during recessions. So what we are seeing are very moderate job losses, not the kind of sharp job losses that we see during a recession.

GURVEY: Today's report also shows average weekly earnings rising at an annual rate of 2.8 percent. Good news if you are an inflation hawk, bad news if you are an average worker facing rising prices for food and energy. Scott Gurvey, NIGHTLY BUSINESS REPORT, New York.