This morning the Bureau of Labor Statistics (BLS) reported that nonfarm employment rose by a seasonally adjusted 209,000 in July. This marked the 6th straight month that the U.S. economy created 200,000 or more jobs, which hasn’t occurred since 1997! BLS also reported that payrolls rose by 298,000 in June, revised up from an earlier estimate of 288,000, and May’s gain was revised up to 229,000 from an earlier estimate of 224,000.
However, the July unemployment rate also rose from 6.1% in June to 6.2%. Furthermore, as I reported this morning on First Business, “job churn” is down significantly. This worries Fed Chairman Janet Yellen who, despite the recent increase in GDP to 4% in the 2nd quarter, workers are not changing jobs as frequently. This is a major concern because historically American workers engage in job churn to both: a) increase wages and b) expand their skills sets. Furthermore, this has adversely affected younger workers because, according to University of Chicago economists Robert Topel and Michael Ward, American workers historically have accrued up to 67% of their lifetime wage growth in the first ten years of their working career due to job churn.
The jobless rate has now fallen 1.1 percentage points since July 2013, when it was 7.3%. However, many economists had expected payrolls to rise by a more robust 230,000 and the jobless rate to remain at 6.1%.
The Federal Reserve on Wednesday acknowledged improvement in the labor market. But its policy statement warned that “a range of labor market indicators suggests that there remains significant underutilization of labor resources,” and that “a highly accommodative stance of monetary policy remains appropriate“ given the state of the economy.
Hiring last month was broad-based. Payrolls rose by 47,000 in the professional and business services sector, 28,000 in the manufacturing sector and 22,000 in the construction field. Health-care employers added 7,000 jobs, and temp jobs rose by 8,500. Public payrolls were up by 11,000, reflecting hiring by local government agencies. Retailers added nearly 27,000 jobs in July, despite somewhat-cautious consumer spending in recent months.
However, many problems still exist including:
- As I reported in my previous blog Technical Layoffs Increasing Despite Improving Economy! 48,402 technical workers were laid off in the first half of 2014. This is a 68% increase over 2013!
- Almost 3.2 million people in July had been out of work for more than six months, down 1.1 million from a year earlier but still accounting for 32.9% of all unemployed Americans.
- The number of people working part-time jobs because they couldn’t find full time work was 7.5 million in July, largely unchanged from June.
- The jobless rate for African-Americans last month was 11.4%, more than twice the 5.3% unemployment rate for whites.
- Adults without a high-school diploma had a 9.6% jobless rate. (Compared to those with a college degree who had a 3.1% unemployment rate).
What are your thoughts?
