Summary for Week ending July 6th

The week started off with the ISM manufacturing index showing contraction for the first time since 2009, and ended with a disappointing employment report. Those were the key reports for the week - and they were dismal.

However, sandwiched in the middle of the week - around the July 4th Holiday - there was a little better news. Auto sales were stronger than expected, initial weekly unemployment claims declined, construction spending increased, and vacancy rates declined for two categories of commercial real estate in Q2 (but not for offices).

I'll have more on the employment report later today.

Here is a summary of last week in graphs:

' June Employment Report: 80,000 Jobs, 8.2% Unemployment Rate

Click on graph for larger image.

This graph shows the employment population ratio, the participation rate, and the unemployment rate. The unemployment rate was unchanged at 8.2% (red line).

The Labor Force Participation Rate was unchanged at 63.8% in June (blue line). This is the percentage of the working age population in the labor force.

The participation rate is well below the 66% to 67% rate that was normal over the last 20 years, although most of the recent decline is due to demographics.

The Employment-Population ratio was unchanged at 58.6% in June (black line).

The second graph shows the job losses from the start of the employment recession, in percentage terms. The dotted line is ex-Census hiring.

This shows the depth of the recent employment recession - worse than any other post-war recession - and the relatively slow recovery due to the lingering effects of the housing bust and financial crisis.

The economy has added 902,000 jobs over the first half of the year (952,000 private sector jobs). At this pace, the economy would add around 1.9 million private sector jobs in 2012; less than the 2.1 million added in 2011.

However job growth has really slowed over the last three months with only 225,000 payroll jobs added (a 900,000 annual pace), and only 274,000 private sector jobs (a 1.1 million annual pace). This is very sluggish employment growth.