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Optimism surrounded the release of the June U.S. Labor Department Jobs Report, but although the numbers were better than expected, we still have plenty to worry about.
Employers added 288,000 jobs in June, the Labor Department reported Thursday. The unemployment rate dipped to 6.1% from 6.3%, the lowest level since September 2008.
Economists had projected nonfarm payrolls to have risen by 215,000 last month. That was the second-highest forecast in the five-year economic recovery. The only time a consensus forecast was higher was in May 2010, when figures were substantially inflated by the temporary hiring of census workers.
The unemployment rate, meanwhile, was expected to have held steady at 6.3%.
Despite some encouraging figures in the jobs report (released Thursday instead of Friday because of the 4th of July holiday), it is still peppered with troubling data.
Better Numbers, but Still Soft
"For the second month in a row, the jobs report contained both good and bad news," Steven Pressman, professor of economics and finance at Monmouth University in West Long Branch, N.J., told Money Morning.
"While not a reason to set off fireworks and celebrate the end of a bad jobs market, this is a big step after many years of bad jobs data," Pressman continued. "As the unemployment rate fell over the past several years, this decline was mainly due to fewer people looking for work. We now have two months of data showing some real improvements in the labor market. There are actual job gains rather than falling unemployment rates as a result of people no longer seeking work."
Yet worrisome signs persist.
"There are still many people who want a job but are not counted as unemployed because they have not been looking for work," Pressman added.
The labor force participation rate remained stuck at 62.8% (a 36-year low) in June for the third consecutive month. Before the Great Recession, which officially began in December 2007, the labor force participation rate was 66%.
Another major problem is the kind of jobs added, and here's why...