Jobs Report Beats Forecasts as Unemployment Rate Falls to 9.4%
Employment fell by the smallest amount in 11 months in July, allowing the unemployment rate to moderate for the first time since April 2008, while suggesting the the recession is probably in its final stage.
Total nonfarm employment declined by 247,000 in July, compared with expectations for a print of 328k. Revisions were also positive, as June’s loss of 467k jobs is now 403k, and May’s 322k loss is now 303k.
“This number, on its own, is quite positive when comparing it to January's massive 741k slash,” noted Jennifer Lee from BMO Capital Markets. Indeed, losses from May to July averaged 331k per month, compared with 645k per month from November through April.
The unemployment rate inched down one-tenth to 9.4%, in contrast to expectations that it would edge up to 9.7%.
“It is tough to say that a 247k job loss and a 9.4% jobless rate is good news, but in a relative sense, it is,” said Lee.
Analysts from TD Securities called the report “unambiguously strong,” adding that it “underlies the general sense of the U.S. recession coming to an end.”
Looking ahead, some analysts were optimistic that economic growth could be seen in the current quarter, while monthly payrolls could be positive by Q4.
“The outlook for labor markets is increasingly positive,” said John Herrmann from Herrmann Forecasting, who projects growth in the monthly payroll figures by October.
“We are seeing signs of recalling steel workers, auto workers, hi-tech workers, temporary help workers, general merchandise retail workers, wholesale workers, finance workers, other services workers, leisure and hospitality workers,” he added. “Also, job growth in health care, education and the Federal Government remains steady.”
Even the less optimistic were questioning current forecasts. “We are still targeting 10% unemployment by year end, but we are beginning to wonder whether the unemployment rate has peaked because the continuing claims data have made a noticeable move downward,” said Joseph LaVorgna from Deutsche Bank, who looks for GDP to expand by 2.25% in the final six months of this year.
Since December 2007, payroll employment has fallen by 6.7 million.
Employment by Sector:
- In Construction, jobs declined by 76,000 in July, in line with the average for the past 3 months (-73,000). From November to April, the monthly average was -177k.
- In Manufacturing, employment fell by 52,000. Since the recession began about 2 million manufacturing jobs have vanished. “In large part, July's seasonally-
- adjusted increase reflects the fact that previous job cuts had been so extensive that there were fewer workers to lay off during the seasonal shutdown,” the report said.
- In Retail trade, employment declined by 44,000, a worse figure than the -27k average over the prior 3 months.
- In Professional and Business services, jobs fell by 38,000. Since the recession began 1.5 million jobs have been lost, but declines have been less substantial in the last 3 months.
- In Transportation and warehousing, employment fell by 22,000 jobs in July. The three-month average of 17k is half the average from November through April (-34,000).
- In the Financial sector, the economy shed 13,000 jobs. The three-month average is 23,000, half the average from November through April (-46,000). Since the start of the recession, the financial sector has lost 501,000 jobs.
- Health care jobs advanced by 20,000 in July, in line with the average monthly gain for the first half of this year.
Not all Details were Positive:
- The average duration of unemployment shot up to a new record high at 25.1 weeks.
- Average hourly earnings moved up just 0.2% in July. The year-over-year trend is the slowest in five years at +2.5%.
- The number of long-term unemployed â€
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