At first glance the unemployment rate decrease looks good. Then you see that the labor participation rate decreased too. That’s not a good thing. The economy appears to be doing better, but the growth rate is anemic. We seem to be taking two steps forward and one step back.
Employers added fewer workers than anticipated in July even as the U.S. jobless rate dropped to 7.4 percent from 7.6 percent, indicating uneven progress in the labor market. The labor participation rate dropped to 63.4 percent from 63.5 percent. The 162,000 increase in payrolls last month was the smallest in four months and followed a revised 188,000 rise in June that was less than initially estimated. The median forecast of 93 economists surveyed by Bloomberg called for a 185,000 gain. Workers spent fewer hours on the job and hourly earnings fell for the first time since October. The slower pace of hiring suggests some employers are confident they’re able to meet demand with current staffing levels as the economy begins to emerge from a first-half slowdown. At the same time, improving consumer confidence and auto sales have encouraged other companies to take on more workers.
Retailers added almost 47,000 workers in July, the most in eight months. Employment in education and health services showed the smallest gain in a year. Construction employment fell and manufacturing rose for the first time in five months. Bloomberg survey estimates for total payrolls ranged from increases of 23,000 to 225,000. Revisions to prior reports subtracted a total of 26,000 jobs from overall payrolls in the
previous two months.
Private employment, which exclude government agencies, rose to 161,000 after a revised gain of 196,000. They were projected to rise by 195,000, the survey showed. The unemployment rate was forecast to drop to 7.5 percent from 7.6 percent, according to the Bloomberg survey median. Average hourly earnings fell 0.1 percent to $23.98 in July from the prior month, and were up 1.9 percent over the past 12 months. The average work week for all workers fell to 34.4 hours from 34.5 hours.
Assistant State Treasurer
Chief Investment Officer
State of Louisiana
Department of the Treasury