While the Canadian labour market continues to humble cautious economists with its blazing performance, the U.S. employment picture continues to disappoint.

U.S. payroll employment rose in June by a smaller-than-expected 36,000. Bank of Montreal notes that the result represents an improvement on May, only due to a downward revision to 24,000 new jobs that month from prior estimates of 41,000.

Also, the unemployment rate rose to 5.9% from 5.8% in May. “The bottom line of the report is that businesses remain cautious about hiring new workers despite indications that overall expenditure remains robust,” says BMO.

“While Canada’s job market lights up like a house on fire, the U.S. job market seems more like a campfire on a rainy day,” says RBC Financial. “The United States is still has a very long way to go to make up the 1.78 million jobs eliminated since March of last year. Manufacturing lost 23,000 jobs, not the sign of a robust turnaround although the pace of job losses in this sector has been moderating.”

RBC points out that there is good news, in that hours worked continues to rise, “which means the economy is growing and stronger job gains are likely in the near future”. It is also hopeful that the U.S. may be set to blast off. “If the stock market settles, we could see strong gains as early as July or August. When the United States really gets going it makes Canada’s numbers look like rounding errors.”

BMO Nesbitt Burns is more cautious, noting, “The U.S. economy is in recovery mode, and the labour market is slowly — very slowly — coming back to life. However, the foundations of the rebound remain very shaky.”

BMO points out, “Though expenditure in the U.S. economy continues relatively robust through the first half of the year, sluggish labour markets present a risk that this strength will not be sustained.” However, it still believes that conditions are sufficiently stimulative that this risk will not be realized and that by the second half of this year labour markets will join in on the recovery. “That said, the pace of recovery in job creation is slower than what we had been expecting. As a result, we have lowered our outlook for Q3 growth to 4.25% and pushed back the commencement of the expected Fed tightening until the November 6 FOMC meeting.”

RBC says that weak growth in the U.S. means that all the countries with weak domestic economies that are looking for a boost from the U.S. (including Japan, Mexico, much of the Pacific Rim including Hong Kong, Germany, and others) will be disappointed. “This means the global slowdown will last a bit longer and interest rates around the world will stay low for longer.”

U.S. Bureau of Labor Statistics
http://www.bls.gov/news.release/pdf/empsit.pdf