Nonfarm Payrolls Worsen in June

U.S. employers cut 467,000 jobs last month, sending the unemployment rate up to 9.5%. This was the first time since January that nonfarm payrolls worsened.

The June drop was also far worse than economists had projected. Offsetting the bad news was a positive revision to May's number, with "just" 322,000 jobs being shed in the month.

Though the June unemployment rate was only fractionally higher than the month previous, it does imply that more than 1 out of every 11 Americans is unemployed. This is a conservative estimate, given that the unemployment rate has been previously criticized for under-counting the number of jobless workers.

This morning's data reinforces what I have said before: the economy is not out of the woods. Though economic conditions are clearly better than they were a few months ago, we remain in the midst of a recession.

Furthermore, once the economic data does finally start showing growth, it won't feel like a recovery to many Americans. Jobs will continue to be shed as CFOs focus more on cash flows than expansion. It's going to be a long, slow recovery.

Given the current backdrop, investors need to start positioning their portfolios for growth while not being overly aggressive. Look at companies that could benefit from the early stages of a recovery, such as International Business Machines (IBM - Analyst Report), Research in Motion (RIMM - Analyst Report), National Semiconductor (NSM - Analyst Report) and Weatherford (WFT - Analyst Report). At the same time, balance out the portfolio with more conservative names like Sara Lee (SLE - Analyst Report) and Coca-Cola Femsa (KOF - Snapshot Report).

What you don't want to do is to be overly aggressive and buy companies that still have too much economic risk, such as Nordstrom (JWN - Snapshot Report), or stocks that have gotten ahead of themselves, like Palm (PALM - Analyst Report).