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By Jason Stipp | 07-08-2011 09:25 AM

Toxic Mix of Worries Sidelines Hiring

Companies' hiring plans are in a holding pattern over concerns about commodity inflation, global and political uncertainty, and corporate profitability, say Morningstar's Bob Johnson and Vishnu Lekraj.

Jason Stipp: I'm Jason Stipp for Morningstar. We got the government employment report for June, and far from seeing a rebound from a disappointing May, we actually saw fewer jobs added on the private sector, and also on the top-line. Only 18,000 jobs added to the economy in June according to this report.

We're going to dig into the numbers and talk about what they might mean. I am here with Vishnu Lekraj. He is an equity analyst covering the employment sector, and Bob Johnson, who is our director of economic analysis. Thanks for joining me, guys.

Vishnu Lekraj: Thanks

Bob Johnson: Thanks.

Stipp: So Vishnu, there are a lot of things we were hoping to see in this report, and I don't think we saw a single one of them. Can you give me a top-line on your reaction?

You said if we saw fewer than 100,000 jobs added that you'd be worried. We certainly saw a much fewer jobs added. What's your take on the report?

Lekraj: I am a little worried. Looking at this month and last month, there is little bit of a trend that starting in terms of no job growth, and I was trying to find, look down, deep in the numbers--sometimes there is a positive and sometimes a negative that could offset each other. When you look at this report, there really wasn't a lot of positive. All categories were either pretty much flat or slightly negative. So there was zero job growth according to this report over the month of June. Now that's not necessarily a total bad thing. When you take a look at ... all the uncertainty, at least businesses are not laying off a lot of people; they're just not hiring.

Stipp: When you look underneath, we had seen some strength in some of the underlying sectors, but it seems like some of that has gone away. Are you surprised that some of the sectors that had been adding jobs earlier in the year were sort of flat again?

Lekraj: Yes. Health care and education are flat. There is no growth there. Leisure/hospitality was slightly positive this month, but we'd like to see more growth out of that, just for seasonal factors. Retail, again, struggled, and manufacturing/goods-producing sector, it's just nonexistent right now as far as jobs.

Stipp: So Bob, I looked through this report, and I was looking for some ray of light, and I didn't find a single one. Did you find anything in this report to like? Was there anything that offered you some hope?

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