June nonfarm payrolls expanded by 80,000 and the unemployment rate held steady at 8.2%. There are still 12.7 million people classified as unemployed, with 41.9% of them being unemployed 27 weeks or longer. In the first quarter of 2012, the average payroll gain was 226,000 per month. The second quarter averaged a mere 75,000 per month. It seems as though job creation has effectively taken the early summer off.
The lackluster jobs numbers will likely fan the flames of talk for additional monetary stimulus by the Federal Reserve. This past week, the Peoples’ Bank of China and the European Central Bank cut their target lending and deposit rates, while the Bank of England expanded its asset purchase program. I think we could see the Bank of Japan engage in more asset purchases over the course of the next two weeks. However, I don’t think the Federal Reserve has much additional reason to ease simply because there is very little that more easing would accomplish. Sure, it could move the markets, but it won’t likely move the economy. Any rally in the markets as a result of expectation of more easing would likely be a false foundation for moving the markets or the economy forward.