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By Jeremy Glaser | 07-01-2010 10:35 AM

Don't Get Spooked by Jobs Report

Friday's jobs report will show declines as the Census lays off workers, but Morningstar's Bob Johnson and Vishnu Lekraj think the underlying trend will be stable.

Securities mentioned in this video
PAYX Paychex Inc

Jeremy Glaser: For Morningstar.com, I am Jeremy Glaser. After May's disappointing jobs report, investors are anxiously waiting to see what June's unemployment picture looks like. I am here today with Associate Director of Economic Analysis, Bob Johnson and Employment Analyst, Vishnu Lekraj, to preview tomorrow's report. Gentlemen, thanks for joining me.

Vishnu Lekraj: Thanks, Jeremy.

Bob Johnson: Good to be here.

Glaser: The consensus right now is that we're going to lose jobs next month. What's behind the headline number? Do you agree with that consensus? Do you think people should be worried about a negative unemployment report?

Lekraj: The consensus includes a negative or a decrease in census workers, which June usually is the month where you see the most census workers let go. Now the census workers are going to be a drag for the whole rest of the year here. When there were a positive tailwind for the first half, they're going to be a drag over the second half. So, when you include that, consensus says 100,000 is going to be the loss for June. I'm looking at a 145, but that includes 15,000 growth excluding census workers and 45,000 private sector growth.

Glaser: So even though the headline number might look negative, that's really kind of the noise in the census hiring and firing, and doesn't have anything to do with the underlying trend.

Lekraj: Just like last month, you got to look past that the headline number.

Glaser: So, Bob, I know that you look at a lot of regional reports to try to get a sense of where the big number is going to come from. What have you been seeing in the trends of this month? And do you think we're going to see this kind of private sector growth again?

Johnson: Yeah. I think, if you look at the purchasing manager reports, there is a number of regional ones and then this morning we got the national one. In most cases, the employment number is still over 50 indicating employment growth in manufacturing. Some of the survey show continuing improvement in hiring and some show some deceleration. So it's a little bit mixed, but all of them show growth.

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