The just-released July report affirms economist predictions that the U.S. economy remains too anemic to bring down the unemployment rate. The economy is still at 2% growth and is treading water, not bringing us any closer to normal levels of unemployment. The disappointing economic news from the report along with the disappointing news from consumer spending and manufacturing has resulted in a decline in forecasted third quarter GDP growth. The unemployment rate ticked up to 8.3% from 8.2%, adding 163,000 nonfarm jobs. While this report is not one to celebrate, the Obama administration can take solace in the fact that the number of jobs added is greater than the 95,000 that were expected by economists.
The numbers aren’t indicative of the kind of growth we’ve had in the beginning of the year, but July’s additions are better than any month since February. July’s performance was much better than June’s poor performance of only 64,000 job additions. Companies added temporary workers in the manufacturing and restaurant businesses. Professional and business services added 49,000 jobs, manufacturing added 25,000 jobs, and the health care industry added 12,000 jobs. We saw declines in the number of utility workers, by 8,000, due to a labor dispute at ConEd (the work stoppage ended last week). Unsurprisingly, there was also a reduction in construction and government education jobs. We’ve seen this pattern for the past two years, which is why the Jobs Act is so crucial—it targets these two industries through investment in infrastructure and helping the local governments keep their teachers.
Many companies are holding off hiring until they have more clarity about policy conditions (congress is now in recess and is not expected to commence any noteworthy actions before November’s election) and global markets—particularly regarding the European debt crisis. The American fiscal tightening scheduled for the end of 2012 is also a major concern for companies.
If needed, the central bank can be expected to launch another round of stimulus, most likely through asset purchases and extending its public predictions on interest rate policy. Fed policy makers are slated to meet formally on September 12 and 13.
The numbers aren’t indicative of the kind of growth we’ve had in the beginning of the year, but July’s additions are better than any month since February. July’s performance was much better than June’s poor performance of only 64,000 job additions. Companies added temporary workers in the manufacturing and restaurant businesses. Professional and business services added 49,000 jobs, manufacturing added 25,000 jobs, and the health care industry added 12,000 jobs. We saw declines in the number of utility workers, by 8,000, due to a labor dispute at ConEd (the work stoppage ended last week). Unsurprisingly, there was also a reduction in construction and government education jobs. We’ve seen this pattern for the past two years, which is why the Jobs Act is so crucial—it targets these two industries through investment in infrastructure and helping the local governments keep their teachers.
Many companies are holding off hiring until they have more clarity about policy conditions (congress is now in recess and is not expected to commence any noteworthy actions before November’s election) and global markets—particularly regarding the European debt crisis. The American fiscal tightening scheduled for the end of 2012 is also a major concern for companies.
If needed, the central bank can be expected to launch another round of stimulus, most likely through asset purchases and extending its public predictions on interest rate policy. Fed policy makers are slated to meet formally on September 12 and 13.
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