Disappointing jobs news
U.S. employment news was disappointing again in July. American business leaders simply remain wary of Washington’s anti-business stance and rhetoric and prefer to enhance earnings through cost-cutting investments in technology and finding more creative ways to maximize current employment levels.
The American economy lost 131,000 net jobs in July, about 70,000 worse than expected. The loss of 143,000 temporary Census jobs, which was expected by economists, pushed the “headline” number into the red.
Private sector employment rose by 71,000 jobs, less than the 90,000 consensus forecast. To add insult to injury, June’s previously reported net loss of 125,000 jobs was revised to a net loss of 221,000 jobs. Private sector gains in June were revised sharply lower from a gain of 83,000 jobs to only 31,000 jobs.
The nation’s unemployment rate was 9.5 percent in July, matching June’s rate. Forecasting economists had expected a slight rise to 9.6 percent. The rate remained unchanged because another 181,000 people left the labor force, on top of the 652,000 people who left the labor force in June. These people-no longer looking for jobs-are no longer counted as unemployed.
The loss of temporary Census jobs has led the employment data to be extremely volatile in recent months. An additional 196,000 temporary Census jobs are still to be eliminated, suggesting the “headline” numbers of the next few months will also be weak. Economists and financial market players will continue to focus on private sector job gains — or losses.
Good news? The private sector added 630,000 net new jobs during 2010’s first seven months, an average gain of 90,000 net new jobs monthly. Bad news? The pace of private sector gains has slowed versus March to May.
In addition, total government employment away from the Census has also been extremely weak, with a loss of 59,000 jobs in July, and nearly 170,000 jobs year-to-date. The Great Recession has had the most detrimental impact on state & local employment of any economic event since the Great Depression.
Some would suggest that a significant reversal of employment at the state & local level is necessary after the excessive employment build-up in many states in the years between roughly 2002 and 2007. The President’s very recent proposal to give another $26 billion of borrowed money to states to help offset cuts to teachers and other state & local employees draws both praise and criticism from politicians and voters. Even with the new funding, it is likely that state & local employment will continue to decline modestly over the balance of the year.
Goods producing employment rose by 33,000 positions in July, led by a rise of 36,000 net new manufacturing jobs. Mining & logging added 8,000 jobs, while construction lost 11,000 jobs.
The private service providing employment area added 38,000 net new jobs in July, led by 30,000 additional jobs in education & health services. The transportation & warehousing sector added 12,000 jobs, while wholesale & retail sales added a combined 15,000 jobs.
Financial activities lost 17,000 jobs, while professional & business services lost 13,000 positions. Leisure & hospitality, information, and other services added 11,000 jobs.
Even as the overall employment report was weak, there were a few bright spots:
• The number of people out of work for six months or more dropped slightly from 6.8 million in June to 6.6 million in July
• The median duration of unemployment (half less, half more) declined from 25.5 weeks in June to 22.2 weeks in July
• The “underemployment” rate, a figure which includes those unemployed, people working part-time who would prefer to work full-time, and those discouraged workers who have given up looking for a job, remained at 16.5 percent in July. The rate had exceeded 17.0 percent as recently as April
• The average hourly wage of all employees on private nonfarm payrolls rose four cents (0.2 percent) in July, with a meager 1.8 percent rise during the past 12 months. However, the 1.8 percent rise exceeds the 1.1 percent increase in the Consumer Price Index during the most recent 12-month period
• The average workweek for all employees on private nonfarm payrolls increased by 0.1 hours to 34.2 hours in July, the equivalent of more than 400,000 new jobs
In addition, there is a trend afoot that may be surprising and is clearly good news. More American firms that had previously shipped manufacturing jobs to China and other lower-cost nations are rethinking that proposition, with more companies returning jobs to the U.S. Sharply higher wage costs in Asia, high shipping costs, quality concerns, long product cycles and various other reasons have led to this “onshoring” development.