July Jobs Report Better Than Expected, But Still Not Very Good
There is little to cheer in the jobs report released by the Labor Department today.
Going in to today’s release of the July jobs report from the Labor Department, the consensus forecast was for a gain of between 75,000 and 85,000 net new jobs, so people breathed a sigh of relief when the numbers turned out to be better than expected:
Hiring picked up slightly in July and the unemployment rate dipped to 9.1 percent, an optimistic sign after the worst day on Wall Street in nearly three years.
Employers added 117,000 jobs last month, the Labor Department said Friday. That’s better than the past two months, which were also revised higher.
The mild improvement may ease investors’ concerns after the Dow Jones industrial average plummeted more than 500 points over concerns that the U.S. may be entering another recession.
“Huge sigh of relief in the markets that we got a relatively good number—not an absolutely good number but a relatively good number. And don’t underestimate how important that is,” Mohamed El-Erian, co-CEO of bond manager Pimco, told CNBC.
(…)
Businesses added 154,000 jobs across many industries. Governments cut 37,000 jobs last month. Still, 23,000 of those losses were almost entirely because of the shutdown of Minnesota’s state government.
The unemployment rate fell partly because some unemployed workers stopped looking for work. That means they are no longer counted as unemployed.
The report follows a string of gloomy data that shows the economy has weakened.
(…)
But the government revised the previous two months’ totals to show hiring wasn’t as weak as first estimated.
The economy added 53,000 in May, up from an earlier estimate of 25,000, and 46,000 in June, up from 18,000. June’s total was still the weakest in nine months.
Hiring in July was broad-based. Manufacturers added 24,000 jobs in July, as auto companies laid off fewer workers in July than usual. Retailers hired a net total of 26,000 employees. Employment in health care grew 31,000. Hotels and restaurants added 17,000.
So, slightly better than we expected but also plenty of caveats. For one thing, labor force participation in July was 63.9%, the lowest it has been since January 1984. If the labor force participation rate were at the same level it was when President Obama took office, the unemployment rate would be closer to 11.2%. For another, the number of jobs added is far below what would be needed to lead to full recovery:
To regain all the losses in the labor force since the December 2007 start of the great depression, which at this point are 10,596,000 when adding the 3,870,000 growth in the labor force over that period together with the 6,726,000 cumulative jobs lost, somehow America needs to add 16,356,500 jobs over the next 64 months. Good luck America.
Good luck indeed.
At the very least, these numbers are likely to put a halt to the slide in world stock market that started with yesterday’s bad, bad day on Wall Street. Indeed, that is exactly what appears to be happening this morning. Nonetheless, the forecasts for the market, and the economy for the rest of the year are hardly good:
The rough ride for equities may not be over, according to the charts. After losing 500 points on Thursday, the Dow could drop another 700 point before finding some support, Darryl Guppy, CEO of Guppytraders.com told CNBC on Friday morning.
With the head and shoulder pattern in the Dow, it’s giving us a downside target projection of around 10,600,” Guppy said, after Wall Street suffered its worst sell-off since early 2009.
(…)
“The key factor is we are now beyond the crossroads,” he warned, “For instance the S&P, we’ve moved below the neckline value and we’ve moved below the neckline value in the Nasdaq.”
He thinks the Nasdaq could hit 2300, a 250 point move down from Thursday’s close; and the S&P 500 could hit 1140.
In other words, we are hardly out of the woods yet. Today’s report is better news that I was expecting given the economic figures that had already come out for July, but it’s nowhere near recovery level, and I don’t see how we get to that point anytime in the next six months to a year.
John Kerry said the numbers were terrific on Morning Joe.
This would be why John Kerry lost in 2004
This is what Republicans dream about when they aren’t dreaming about preventing same-sex marriage and de-funding Planned Parenthood.
But it’s hard to grow when you’re shrinking.
Are Republicans really interested in recovery? Or is the plan simply to keep the economy in the doldrums for political gain?
No Doug the John Kerry who served in Vietnam.
@Doug Mataconis:
I realize appearing on Morning Joe is undignified, but it’s not THAT bad.
The first 15 minutes of Morning Joe is often worthwhile. (Don’t know if Kerry made my cut-off.)
For eight years Bush 43 grew GDP at less than 2.3% and added a paltry 20,000 jobs a month. Maybe Republicans just do not understand what the word GROWTH means.
@hey norm,
I suppose that if I rise to simplistic “Obama” numbers I should make the same argument for “Bush.”
Well, not quite a defense ;-). I think he had bad policies but there were definitely in response to disasters outside his control. In particular the Dot.com crash created a particular kind of deficit in the economy. They were “paper” losses to some degree but they were huge. Some sort of stimulus and some sort of low interest rate regime was justified.
The proper attack should be on how Bush policies could have been better … but not on whether 2.3% was good or bad under those conditions.
@ john personna…
Yes – you are correct. My rant is that we are pursuing policies that are destructive and that have been proven failures…and yet we keep pursuing them as though the pay-off is coming any minute now. Austerity – cutting government spending, and thus jobs – is not the answer to our problems.
To everyone who thinks 117,000 new jobs is weak performance; well yeah, but wouldn’t 154,000 be better right now? Still not where we want to be…but better. That is not what Republicans want though, and it’s not where they are pushing us. They are more than happy to lose the 34,000 government jobs, and the spending those jobs represent. Their failed ideology is holding us back.
@hey norm:,
OK, fair enough. I warned on austerity here a little early, and got some flack from Steve V and others that it wasn’t technically austerity, then, yet. We are closer now. It is the trend, to at least a mild form.
Most of the government jobs are the Minnesota furloughs. I suspect those will bounce back soon.
And Obama comes on TV today and talks about tax credits. How can you force companies to create jobs when jobs are not needed? In my town, we made sparkplugs-went to Mexico, Crankshafts-consolidation, storage equipment to Mexico, book making-gone, heat lamps-gone. Now what tax credits will create jobs? What widgets will be made? The factories are closed.
And on the right wing side, it is the constitution, free markets, God and country, and more tax cuts. Still does not make any sense.
And the libertarians, just say “ain’t no problem here?”
Dave Schuler,
No. There are cuts throughout the country, just as they have been in every month for the last year plus (since the temporary census jobs). Compare the charts in this private sector only table with this overall table.
@Gerry W.:
Well not really writing this at Gerry since he’s already made up his mind. But the problem is that is no longer economically feasible for some businesses to stay here, they either move over seas or shut down. Generally the jobs losses and such are replaced with another industry. But we can’t force the spark plug factory to reopen. Even if we became totally isolationist and said, no trade in or out with any anywhere ever again. People might decide, “We don’t need spark plugs.” Or more realistically, “We don’t need as many.”
The bottom line is that inhibiting trade is not going to increase anybody’s well being…it will reduce it. This should be obvious. The corollary to this is that the economy is going to be a dynamic and evolving thing. Expecting a factory to stay open forever is simply unrealistic.
@Steve Verdon:
Never said that we should keep the same industries. The fact remains is that we have globalization and that brings 2 billion cheap laborers, in addition, you have automation and more loss of jobs, lean principles and more loss of jobs, and mergers and consolidation and more loss of jobs. We have not had this phenomenon before. And because of that, the middle class is losing jobs and wages.
I see nothing that will create more jobs. Any widget can be made anywhere. And as I said before, the democrats are spending in the wrong areas, the republicans want more tax cuts on top of the Bush tax cuts, the fed is printing money to have low interest rates and a low dollar so that we can export more with 1/3 less manufacturing, and the states wants casinos for jobs. Now, I find it all hilarious as we keep sending jobs overseas. And that is 57,000 factories or 6 million jobs over a decade. And we have nothing to replace those factories. So, I find the severity of this should not be understated.
And I have pointed out that you need to invest in the country, in the people, and in the future to create the future jobs. This is what confronted Roosevelt as there was no demand in the private sector and we are seeing something similar today. Bush had his roaring 20’s and all the stimulus we had is all used up. The tax cuts are less effective, the fed is printing, and we lost the jobs to stimulate.
So, on TV, we hear the spin of less regulation and cutting corporate taxes, etc., but even if that was the answer, it would not be an answer to the enormous pool of labor. 2 billion cheap laborers trumps everything.
But, libertarians like you, don’t want the government to do anything. And we get no answers. And all I am saying is that if you lose the jobs, what is going to replace them? And no one has come up with the answers.
I just sit in a small town, but as I hear all the pundits, they just ignore what people are going through. These pundits are in another world. Heck, I might as well be living in Croatia.
I do not expect to inhibit trade, it is that we lost what can trade. We gave up our jobs, but there are no jobs to replace what we lost. It is like cutting off your right arm, but you cannot replace that.
@Steve Verdon:
This was the conventional wisdom that convinced Clinton to sign NAFTA, but I think Gerry is saying it didn’t really work out that way or that well. Not only did jobs move, it is very hard to prove that “jobs losses and such are replaced with another industry.”
Isn’t the data that financial sector GDP grew but that middle class jobs suffered net losses in the period?
BTW, I think also that as we reduced tariffs, we didn’t really replace tariff receipts for the federal government. That is, it was a contributor to deficit. Perhaps conventional wisdom at the time was that those other benefits, those other jobs and other economic gains, would be taxable … but that was a bit of a leap (looking back).
I don’t want high tariff or protectionism, but only want an almost-free trade regime, with something like 2-3% uniformly on all imported goods. As I understand it, the average is now around 2%, but it is very lumpy, not even, and not economically efficient.
And I will leave you with this:
http://news.cnet.com/8301-1035_3-20080339-94/wireless-jobs-decline-even-as-industry-booms/?part=rss&subj=news&tag=2547-1_3-0-20
http://news.xinhuanet.com/english2010/china/2011-07/30/c_131018764.htm
@Gerry W.:
I like the second, Foxconn story. That shows an arc.
On the other hand, I think the wireless thing might be that we are just coming off the big 3G, and smaller 4G, build-out. When coverage is complete, wireless can slack until the next “G” is pushed out.