Jobs Report Brings More Bad News for the Unemployed

Heading into Friday morning, no one was expecting much good news from the July jobs report. Unfortunately, the picture it provided of the jobs market is even worse than many expected.

Payrolls shrank by more than projected. Roughly 130,000 jobs were lost last month (much of it due to the end of the census), but estimates for losses had been more in the range of 60,000 or so. There was some pickup in the private sector. But even those numbers provided little reassurance.

Economists say the country needs 150,000 to 200,000 jobs each month to keep the economy growing and to keep employment levels high. The revisions to the June numbers showed we are way below that: just 31,000 private sector jobs created in June, down from the original estimate of 83,000.

Overall, it shows a tepid recovery at best, with fewer than 100,000 jobs being created each month during the first seven months of the year.

Nigel Gault, the chief U.S. economist for HIS Global Insight, put it this way:

“The labor market improvement has slowed to a glacial pace, consistent with third-quarter growth even slower than the second,” Gault wrote in a statement.

“The labor market improvement has slowed to a glacial pace, consistent with third-quarter growth even slower than the second.”
Nigel Gault, Economist for HIS Global Insight

More than 14 million people are looking for work. And the so-called “underemployment” rate remained far higher than the official unemployment rate. “Underemployment” remains at 16.5 percent — meaning those who are working part-time who would prefer full-time work and those who have given up on job searches.

The markets were down early and most early reaction has been fairly pessimistic, suggesting an economic forecast that remains weak for months to come.

“With only 71,000 net new private sector jobs created in July and downward revisions to the last two months, the economy is creating only 90,000 jobs per month this year,” Martin Regalia, the U.S. Chamber of Commerce’s chief economist said in a statement Friday.

Cuts in government jobs were another problem.

Christina Romer, the head of the president’s Council of Economic Advisers who announced last night that she will be stepping down next month, highlighted that issue as the Obama administration continues to make a case for additional aid to states.

“Employment in state and local government, including public school teachers, decreased 48,000,” Romer said in a statement, “underscoring the importance of the additional state fiscal relief working its way through Congress.”

But if you were looking for a few glimmers of hope, there were some signs.

The New York Times’ David Leonhardt found a couple, including a longer workweek.

“The workweek is now longer than it has been since January 2009,” he wrote. “It’s common for employers first to increase the work of their existing employees before they begin hiring new ones.”

Still, Leonhardt and others said the overall assessment shows weak and uneven job growth to come.

The latest report also adds new fuel to the idea that the Fed should begin taking a more active role again when its Open Market Committee meets next week to consider what it can or should do with monetary policy and the economy.

“The report intensifies the pressure on the administration and on the Fed to try to revive growth,” Gault writes “At a minimum, we should expect the Fed to announce the reinvestment of cash proceeds from maturing mortgages in its portfolio.

We’ll have much more on all of this on Friday’s NewsHour– a look at the latest jobs numbers and a Paul Solman report on the so-called “99ers,” those who have been out of work for more than 99 weeks and are out of unemployment benefits to boot.