But Unemployment Did Not Increase

The latest Employment Situation Summary was released a couple of hours ago:

Nonfarm payroll employment continued to trend down in June (-62,000), while the unemployment rate held at 5.5 percent, the Bureau of Labor Statistics of the U.S. Department of Labor reported today. Employment continued to fall in construction, manufacturing, and employment services, while health care and mining added jobs.

Something tells me that the Bush cheerleaders at the National Review are thinking about rehashing their mantra about how the Household Survey is a better measure than the Payroll Survey as they argue that the fact that the unemployment did not rise in June is an indication that things are not so bad after all. But they should check a couple of things before they write this down as employment per the Household Survey fell by 155,000. This from the BLS is really fascinating:

The employment-population ratio was 0.6 percentage point lower than a year earlier.

This ratio was 63.0% as of June 2007, was 62.6% as of May 2008, and now stands at 62.4%. So why didn’t the unemployment rate rise? It seems the labor force participation rate fell from 66.2% as of May 2008 to 66.1% as of June 2008. Then again – it was 66.1% as of June 2007.

The unemployment rate last June 2007 was only 4.6%. With the labor force participation rate over the past year being unchanged, the rise in the unemployment rates just happens to track the drop in the employment-population rate quite well.

And the news is really bad indeed. In fact, when we compare the employment-population ratio as of December 2006, which was 63.4%, to the 62.4% as of last month – things look dreadful.

Update: The White House finds its silver lining:

Nonfarm payroll employment decreased by 62,000 jobs in June and the unemployment rate remained unchanged at 5.5 percent, in line with expectations. Although these numbers are disappointing, the unemployment rate remains below the averages for the past three decades. Despite slow growth, the economy continues to demonstrate resilience. The first quarter GDP was revised up to one percent at an annual rate, and other data suggest growth in the second quarter may be stronger than the first quarter