The employment report appears to confirm that the economy has slipped into a stagnation scenario as both payroll and the household survey reported that employment fell. The drop in employment stemmed largely from the layoffs of census workers as private sector employment rose some 71,000 as compared to 31,000 last month.
Compared to the historic norm employment employment gains this cycle has been extremely weak, but it is stronger than in the jobless recoveries of the 1990s and 2000s.
Hours worked increased 0.4%, but that largely just offset last months decline of 0.3%. The
compound growth three month growth rate slipped to 3.0% from a 3.5% growth rate last month.
Average hourly earnings growth continued to slow as the year over year gain was 1.75%. Because hours worked are expanding the weekly wage gain rose to 3.0%. With zero inflation in the first half of the year this means that real weekly wages are rising moderately.
This gain in real weekly earnings has been reflected in the single most important determinant of real consumer spending, real disposable income excluding transfers. The year over year change in this measure just turned positive for the first time this cycle.