Nonfarm employment fell 345,000 with smaller declines in many sectors. Smaller job losses are consistent with our expectations for growth in the second half of this year. Aggregate hours declined again reaffirming negative economic growth forecasts for the second quarter. Unemployment rates indicate more household credit stress.

Employment Declines Signal a Bottoming

• Job declines have moderated in construction and services over the latest two months. Within the private sector, job gains were reported for healthcare & education as well as leisure & hospitality sectors.

• Secular shifts are becoming more evident for the manufacturing sector. Productivity gains, capital/labor substitution and globalization have all surfaced here.

Unemployment Up, Wage Growth Continues to Slow

• Rising unemployment rates are consistent with slower wage growth, and thereby weakness in personal income and ultimately, consumer spending.

• The duration of unemployment continues to rise suggesting continued stress on unemployed workers who realize their unemployment will be longer than they feared. Rising duration suggests higher consumer credit delinquency rates.

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