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POLITICS: PennAve

Jobs report disappoints with 162,000 jobs added, unemployment falls to 7.4 percent

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The labor recovery remains weak but consistent, as data released Friday by the Bureau of Labor Statistics showed that the economy added 162,000 jobs in July and the unemployment rate fell from 7.6 percent to 7.4 percent as labor force participation remained stagnant

Friday’s report came in below analysts’ expectations. Average hourly earnings fell by 2 cents while the average workweek decreased, both signs of an economy struggling to gain momentum.

The number of long-term unemployed — Americans looking for work for longer than 27 weeks — stood at 4.2 million, little changed from the month before. A broader measure of underemployment edged down from 14.3 percent to 14 percent.

The latest report also corrected earlier data released by the BLS to show that previous months’ gains were smaller than initially thought. The number of jobs added in June and May were both revised down by a total of 26,000.

Job growth in July was strongest in retail and restaurants and bars, two industries with below-average compensation levels.

Following a June report that showed an increase of 360,000 part-time jobs in the household survey, part-time job growth continued to rise above normal levels in July.

The number of part-time workers rose by 174,000 and the number of full-time workers increased by just 92,000, according to the household survey. The number of people who wanted full-time work but were unable to find it was essentially unchanged at 8.2 million in July.

A number of analysts, including Moody’s economist Mark Zandi, had suggested that June’s high ratio of new part-time jobs might be the product of regulations included in Obamacare. Friday’s report will not put an end to that line of reasoning, but the longer-term trend is unclear. The household data is volatile and subject to large revisions, making it difficult to quickly identify major changes in the composition of jobs.

It remains difficult to discern from the data the effects of the across-the-board federal budget cuts that began in March as a part of Congress’ 2011 debt ceiling deal and that the White House and Federal Reserve have blamed for slow growth, although there are indications that the sequestration process is slowing federal job growth.

Government jobs grew by 1,000 overall but local government hires accounted for that increase. There were 2,000 fewer federal employees in July.

Since May, the federal government has shed 12,000 workers and a total of 39,000 over the last year.

Friday’s employment report adds to the picture of an economic recovery that has been reliably medicore. Since the economy began adding jobs in late 2010, monthly job growth has consistently hovered near 180,000.

Nevertheless, jobs are not being created fast enough to close the employment gap created by the recession. At July’s rate, it will take more than 10 years to return to pre-recession employment levels, according to the Hamilton Project’s Jobs Gap calculator.

Ian Shepherdson, chief economist for Pantheon Macroeconomics reacting on Twitter, called Friday’s report “disappointing.”

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Author:

Joseph Lawler

Economics Writer
The Washington Examiner