'Soft Patch' on Jobs, With Election on Horizon
With the unemployment report for June due in one week, and the general election a bit more than four months away, the job indicators for the pre-election season remain fragile, according to the latest weekly analysis from Moody's Analytics.
Its projection for the average annual monthly job growth in the six-month period before the election is unchanged at 149,000 — roughly in the middle of the range of 100,000 to 175,000 that historically points to a close race for an incumbent president.
But on its Dismal Scientist blog this week, Moody's sees "another midyear soft patch, with clear signs of weakness in the job market extending into June."
Uncertainty about the euro zone and the prospect of a "fiscal cliff" of budget cuts and tax increases in the United States without congressional action by the year's end are weighing on businesses, it says.
The Moody's post goes on to say: "Data over the past week added to concerns and prompted an adjustment to our forecast for the unemployment rate . We now expect the jobless rate will remain at 8.2 percent, unchanged for June; previously, we were looking for it to notch down to 8.1 percent. ... We expect June's net increase in U.S. payrolls to be 125,000.
"Although significantly better than the 77,000 jobs added in April and the 69,000 added in May, the growth will not do much to boost confidence in the economy. Worries about a new recession are premature, but confidence must hold up for the recovery to continue."