Meet the Author

Yoonsoo Lee |

Research Economist

Yoonsoo Lee

Yoonsoo Lee was formerly a research economist in the Research Department. His areas of research include macroeconomics, labor economics, and regional economics.

Meet the Author

Beth Mowry |

Research Assistant

Beth Mowry

Beth Mowry was formerly a research assistant in the Research Department of the Federal Reserve Bank of Cleveland. Her work focuses on labor markets and business cycles.

07.03.09

Economic Trends

The Employment Situation, June 2009

Yoonsoo Lee and Beth Mowry

The decline in nonfarm payroll employment picked up pace again in June, as losses were a greater-than-expected 467,000. While worse than May’s estimate of −322,000, June’s payroll losses were smaller than average monthly losses during the fourth quarter of 2008 or the first quarter of 2009 (−553,000 and −691,000, respectively). Revisions to April and May added a net 8,000 jobs to the estimates for those months, which brought their respective losses to 519,000 and 322,000. Cumulative employment losses in this recession now total 6.5 million, setting total employment back to its level in 2000.

The Diffusion Index of Employment Change, which tracks the percentage of industries with increasing employment, receded slightly from 31.0 to 28.6 last month but remains above its cyclical low of 19.6 in March. While this is an improvement over the first quarter’s average reading of about 20, it still sits well below the threshold of 50 that indicates an equal balance of industries with expanding and contracting employment.

Payroll losses in June were broadly spread across goods-producing industries (223,000) and service-providing industries (244,000). Within goods-producing industries, construction jobs declined by 79,000, which was greater than May’s loss but less than any other month so far this year. Manufacturing jobs declined by 136,000, with 27,000 of those occurring in motor vehicles and parts manufacturing.

Within service industries, trade, transportation, and utilities shed 51,000 jobs in June, with 21,000 of those in retail trade. Motor vehicle and parts dealers alone accounted for half of the retail losses alone. Information services shed 21,000 jobs, roughly in line with recent months, and leisure and hospitality shed 18,000 jobs after an equal but opposite gain in May. Financial activities (−27,000) posted the smallest loss since October 2008, a considerable improvement over the sector’s average decline of about 50,000 each month in the first quarter.

The 118,000 payroll decline in professional and business services was far worse than May’s decline of 48,000 but smaller than any other month since October 2008. Much of the decline in this sector was attributable to administrative and support services, specifically temporary help services. The 37,600 loss in temporary help services was much greater than its previous loss of just 8,100 in May. Education and health services, a sector that has not posted a loss since 2004, did not disappoint, adding 34,000 jobs. Government payrolls, however, recorded a rare and surprising loss of 52,000, partly due to the layoff of temporary Census workers.

Labor Market Conditions and Revisions

  Average monthly change (Thousands of employees, NAICS)

April
current

Revision to April

May
current

Revision to May

June
2009
Payroll Employment
−519
−15
−322
23
−467
Goods-producing
−267
7
−215
10
−223
Construction
−103
5
−48
11
−79
Heavy and civil engineering
−21.7
−4
−8
0
−16
Residentiala
−39.9
6
−12
8
−31
Nonresidentialb
−41.7
2
−28
4
−32
Manufacturing
−150
4
−156
0
−136
Durable goods
−130
5
−128
3
−112
Nondurable goods
−20
−1
−28
−3
−24
Service-providing
−252
−22
−107
13
−244
Retail trade
−33
4
−18
0
−21
Financial activitiesc
−46
−1
−30
0
−27
PBSd
−127
−16
−48
3
−118
Temporary help services
−54
1
−8
−2
−38
Education and health services
17
4
47
3
34
Leisure and hospitality
−34
4
18
15
−18
Government
73
−19
−10
−3
−52
Local educational services
3
−1
−1
−3
3
  1. Includes construction of residential buildings and residential specialty trade contractors.
  2. Includes construction of nonresidential buildings and nonresidential specialty trade contractors.
  3. Financial activities include the finance, insurance, and real estate sector and the rental and leasing sector.
  4. PBS is professional business services (professional, scientific, and technical services, management of companies and enterprises, administrative and support, and waste management and remediation services.
  5. Source: Bureau of Labor Statistics.

The unemployment rate crept up from 9.4 to 9.5 percent, rising just 0.1 percentage point after six consecutive increases of 0.4 percentage point or greater. The employment-to-population ratio slipped to 59.5 percent in June, its lowest level since April 1984.