Big job gains in July
But the nation’s unemployment rate rises too
WASHINGTON – The U.S. economy broke out of its hiring slump last month with the biggest net gain in jobs since February, easing fears that the slow and bumpy recovery was falling off track.
Employers added 163,000 jobs in July, more than double the average of the prior three months. But as welcomed as that acceleration was, analysts still considered the pace of job growth just middling.
And it did little for the nation’s unemployment rate, which ticked up a notch last month to 8.3 percent, the Bureau of Labor Statistics said Friday.
The split picture in the report – more jobs but higher unemployment – reflects the two different surveys that the agency uses for its monthly snapshot of the job market. And it gave President Barack Obama and the presumptive Republican challenger, Mitt Romney, each something to seize on.
Analysts said the July jobs report may complicate but probably won’t sway the Federal Reserve’s thinking on whether to provide more stimulus for the economy. The Fed this week signaled a stronger willingness to take action, possibly at its next meeting in September.
Economists remained cautious about the hiring outlook, saying monthly job growth wasn’t likely to get any better than July’s over the rest of the year.
The U.S. economy is expanding at a sluggish pace because of softening consumer spending and government cutbacks. Employers also are weighed down by uncertainties over the debt crisis in Europe, a slowing global economy, and the political and fiscal situation in the U.S.
“The most basic problem is we just don’t have strong enough (economic) growth to see job prospects improve,” said Keith Hall, former commissioner at the Bureau of Labor Statistics and now senior research fellow at George Mason University.
Still, after a string of gloomy jobs reports and weak signals on the economy, Hall and other analysts were encouraged to learn that the labor market wasn’t losing ground. And for a change, the employment report beat forecasts from economists, who on average predicted job growth of about 100,000 for July.
Stocks surged Friday, with the Dow Jones industrial average jumping 217.29, or 1.69 percent, to close at a three-month high of 13,096.17.
At a White House event Friday, Obama briefly touched on the July employment report, saying the nation had added 4.5 million jobs over the last 2 1/2 years. He acknowledged that there was more to do, but then quickly turned to his dominant campaign message: chiding Republicans for seeking tax breaks for the wealthy at the expense of the struggling middle class.
Romney, in a statement, focused largely on the unemployment rate, noting that it has been above 8 percent for 42 months in a row.
“Today’s increase in the unemployment rate is a hammer blow to struggling middle-class families,” he said. “Middle-class Americans deserve better, and I believe America can do better.”
The unemployment rate was 9.1 percent a year ago and had drifted down to as low as 8.1 percent in April, partly because many of the unemployed dropped out of the labor market. The Bureau of Labor Statistics doesn’t count as unemployed those who have quit looking for work, and its survey of households can generate results that are volatile from month to month.
Analysts put more stock in the monthly change in payroll jobs, which is based on a Bureau of Labor Statistics survey of businesses and government agencies. Last winter, job growth sped up to an average of about 250,000 jobs a month, but then slowed to an average of just 73,000 from April to June.
The slowdown was exaggerated by the mild winter weather, as construction firms, restaurants and other businesses kept staff on longer in the winter but hired less in the spring.
With Friday’s report, analysts believe the underlying rate of job growth is about 150,000 a month. That’s enough to absorb new workers entering the job market, but little beyond that. And it’s far short of what’s needed to make a significant dent in the ranks of the 12.8 million jobless or in the overall unemployment rate.
At the July rate of job creation, it would take more than eight years to reach full employment, said Heidi Shierholz, a labor economist at the Economic Policy Institute.
“We need growth so much faster to dig out of this hole,” she said, referring to the 8.7 million jobs lost during the 2007-’09 recession. Only half have been recovered.
The July jobs report, however, did show glimmers of hope.
Despite reports of falling export orders, notably from Europe, manufacturers bolstered their payrolls by 25,000 in July, more than double the average of the prior three months.
Professional and business services, a broad category that includes computer-system designers and lower-paying temporary-help jobs, added a solid 49,000 jobs in July.
Government employment fell by 9,000, as it did in June, but restaurants bulked up and retail employment rebounded from its drop in June.
“While the monthly gain is still relatively small by historical standards, it might help spark somewhat higher consumer optimism and spending,” said Kathy Bostjancic, an economist at the Conference Board, an employer-supported research group.