Is the Hiring Spree Over?


And now, for our latest installment of: “Surprise the Economists!”

By this point, it comes as no surprise that economists were way off on their monthly estimate for job growth. The June report showed employers added only 112,000 jobs to their payrolls last month, less than half the 250,000 economists had been expecting. Beyond the seeming randomness of the payroll numbers, what does the report mean for the labor market’s recovery? for interest rates? Here’s what some economists had to say about the report and its implications for the economy:

The June payroll gain “looks bad but there are no grounds for thinking it marks a reversal of the improving trend in the labor market. The softness partly reflects seasonals … partly an inexplicably small estimate for job creation … and partly the impact of higher oil prices.”
— Ian Shepherdson, chief U.S. economist, High Frequency Economics

* * *
“The job report was disappointing, but early in a labor-market recovery the increases are frequently quite variable. … The details of the June payroll report provides some reason to suspect the gains will improve going forward. Manufacturing employment declined, but every other report pointed to a rise.”
— Joel L. Naroff, chief economist, Naroff Economic Advisors

* * *
“A re-acceleration [in job growth] will be necessary if the economic expansion to successfully make the transition from being stimulus-led to being self-sustaining.”
— Steven Wood, chief economist, Insight Economics

* * *
“Volatility is a fact of life for the jobs report … We would focus on the persistence of the employment gains in both the establishment and household survey over the last three months. Both of these surveys show average employment gains of well above 200,000 per month in the second quarter.”
— John Ryding, chief market economist, Bear Stearns

* * *
“Softer employment growth and a smaller wage gain takes pressure off the [Federal Reserve] and reinforces a gradual path. We look for a 25 bp [quarter percentage point] hike at the Aug 10 [Federal Open Market Committee] meeting, but the Fed should be able to pause at one or more meetings before year end.”
— Stephen Gallagher, chief U.S. economist, SG Corporate & Investment Banking

* * *
“[T]his report squares with other recent indicators showing the economy is entering the second half with a bit less momentum though it still appears to be growing at a healthy clip. Because these data discredit the notion that the economy is suddenly overheating, they argue against the FOMC accelerating the pace of tightening.”
— David H. Resler, chief economist, Nomura Securities International

* * *
“[T]he stakes for July [jobs] data are now raised, and another disappointing report at that time would be cause for concern. Our own economic forecast assumes a sustainable trend of job creation of roughly 200K per month.”
— Joshua Shapiro, chief U.S. economist, MFR Inc.

What the June Jobs Report Means For the Economy, Interest Rates
July 2, 2004 10:06 a.m.,,SB108877471324854084,00.html

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  1. little alex commented on Jul 4

    This is what we are left with, 30 years of outsourcing moving production overseas to cheap labor markets. Add to that illegal immigration. From what I can see true unemployment rate is around 9 to 10 percent. Sorry boys and girls globalism only favors those at the top of the food chain.

  2. Matt Stoller commented on Jul 4

    Globalization isn’t one thing – there are constitutive choices about how trade and capital flows work that determine income inequality.

    Barry, how does this report impact your Presidential forecasting?

  3. Mike commented on Jul 4

    Back out the additions from the birth/death model, and then what do you get? I’ll just leave that as a question even though I know the answer.

  4. skeptic commented on Jul 5

    You’re right, Barry. I took a cheap shot, and as an annonymous troll, I didn’t deserve a response. Despite that, you gave a good one, and you backed it up with your track record, so my hat is off to you, and I offer my humble apologies. Obviously, I think you are worth reading, or I wouldn’t be here.

    Having made such a bad first impression, it is my own fault that you didn’t answer my real question. Having apologised and given you your props, I will try again. Note that implicit in the mere fact that I am asking the question(twice!) is my grudging respect for your skills as an analyst. Note also that my snarkiness is driven not by derision, but by jealously, as I am forced to toil in the trenches of the Federal Courts from which you have so gracefully escaped. Now, my question:

    How does one factor in the fact that a large percentage of the market participants of today are radically different in nationality, social class, investment objectives, and/or location than those of the past when making historical comparisons of market trends? This difference has to have a real effect on market psychology, yet no one I have ever read addresses it, with the sole exception of the book Bull!, which I read on your recommendation, and only then in hindsight, as opposed to using it as a factor in predictions about the future. Indeed, the book makes the somewhat stunning proposition that despite the fact that it was the psychology of millions of individual investors that drove the bull run of 99, we should expect a return to the sort of psychology that drove the market before these folks ever owned stocks, even thought the vast majority of them are still in the game.

    Alas, I will have to remain annonymous, but if you take up this discussion, I promise to continue to be polite and courteous forevermore. I think it is a worthwhile discussion to have because, as I said, I think the effect is real; I think it is largely ignored, and I think any effect that is both real and ignored by other market participants can produce an edge for market participants willing to think about the effect and its drivers long enough to understand it/them.

    I have my own opinion, naturally, but I would prefer to keep my opinion to myself until you take a stab at it, lest I poison your superior thought process with my own.

  5. Fred Boness commented on Jul 6

    Is it just me or are the government statistics really total garbage?

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