Employment: Weakness Continues - Households Under Pressure

Jobs fell 62,000 in June after declines each month so far this year. Job losses were widespread as evidenced by the diffusion index. The unemployment rate was unchanged and remains over 5 percent since March. Hourly earnings continue to moderate so there are reduced wage-push inflation fears. Households and the economy remain in a workout mode.

Employment: Private Sector Job Losses Continue

• Job losses in the private sector have been steady during the first half of this year which suggests weaker industrial production and personal income/consumption growth ahead.
• By sector, manufacturing, construction and retail trade remain weak. The breadth of job losses is reflected in the diffusion index which remains below the 50 break even level.

Wages Slow, Unemployment Spikes

• Hourly earnings growth has slowed modestly over the last six months which suggests reduced wage-push inflation pressures. Slower earnings suggest reduced inflation concerns at the Federal Reserve.
• Unemployment rates have risen for adult men over the last three months and this suggests a deeper labor market decline.

Wachovia Corporation
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