Jobs Report an Upside Surprise
Forecasters had predicted a loss of about 325,000 jobs for the month. The July decline was the smallest since August 2008.
Clearly, there is still pain out on the street. There were 14.5 million unemployed in July, the Bureau of Labor Statistics reported, and the number of long-term unemployed—those out of work for 27 weeks or more—increased over the month by 584,000, to 5 million. Economists warn, however, that even when the recession ends, it will take several quarters before job growth returns. Nonetheless, the fact that the unemployment rate has been relatively unchanged for two months is a positive sign.
"July's U.S. employment report is the gift that keeps on giving. Nearly every element of it is positive—or at least as positive as it can be when employment is still falling by hundreds of thousands a month and the unemployment rate is still close to 10%," Paul Ashworth, senior U.S. economist for Capital Economics in Toronto, said in a research note.
"A Temporary Blip"? Ashworth attributed the dip in the unemployment rate to an unexpected decline in the size of the labor force. "With the economy recovering we would expect to see more job seekers becoming active again—so this decline is probably just a temporary blip that will be reversed in the coming months," he said.
The BLS said construction and manufacturing continued to shed jobs, but jobs in the motor vehicle and parts sector actually increased by 28,000 after seasonal adjustment. However, the BLS noted that previous job cuts in that sector were so deep that there were fewer workers to lay off during seasonal shutdown.
Retail-sector job cuts also remained steep, declining by 44,000, compared with an average of 27,000 for the prior three months.
Financial-sector employment continued to decline—down 13,000—but better than the three-month average of 23,000.
Health-care employment—one of the few continuing bright spots during the recession—increased by 20,000 in July, roughly comparable to the average monthly increase in the first half of 2009.
Average hourly earnings of production and nonsupervisory workers on private nonfarm payrolls rose by 3¢, or 0.2%, to $18.56. Over the past 12 months average hourly earnings have increased by 2.5%, the BLS reported.
In a Friday afternoon statement on the employment numbers in the White House Rose Garden, President Barack Obama said there was "light at the end of the tunnel," for the economy and cited the benefits of the administration's fiscal stimulus program.
"Today we're pointed in the right direction," Obama said. "We're losing jobs at less than half the rate we were when I took office. We've pulled the financial system back from the brink, and a rising market is restoring value to those 401(k)s that are the foundation of a secure retirement. We've enabled families to reduce the payments on their mortgages, making their homes more affordable and reducing the number of foreclosures. We helped revive the credit markets and opened up loans for families and small businesses."