The US economy shed 125K jobs, primarily driven by temporary jobs as 225K workers that were hired for the 2010 Census finished their assignment. Looking at private sector employment there were 83K jobs created, which was lower than the 110K that were expected coming into the week, though its better than what we saw mid-week from the ADP employment change.

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Looking at a breakdown of the various sectors we see that construction continues to suffer, no surprise considering the weakness in housing starts and the slump in the housing sector following the expiration of the government's housing credit. Private sector growth was centered in services, with professional and business services increasing by 46K (20.5K in temp help), education and health services which rose by 22K, and leisure and hospitality which adding 37K, making up for some of the weakness seen in May. The big decline of course was in government hiring due to the elimination of temp Census jobs.

The unemployment rate, which is conducted using a different survey (the household survey) edged down to 9.5% in June from 9.7% the previous month. Expectations had been for a rise. The explanation here is that more people dropped out of the labor force which made the pool of total workers compared to those that are unemployed smaller. The civilian labor force shrank by 652K.

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The household survey is conducted by surveying people and put the number of unemployed persons at 14.6 million. The headline change in the jobs figure is gathered from the establishment survey which is a survey of companies and their payroll figures.

Expectations were for a weak report and disappointing US data has been driving broad Dollar weakness to end this week. With the housing sector retrenching more sharply than expected, consumer confidence and spending down, and slowing growth in manufacturing, the perception is that the Fed will keep interest rates low for longer as the US recovery limps into the 2nd half of the year.

Today's data therefore may not drive sentiment as a weaker US economy seems to have been priced into many currency pairs earlier in the week. The Euro did extend its sharp gains from Thursday as the pair broached the 1.26 level for the first time since May 21st.