For all the buildup to each month's jobs report, this one is kind of a bust. July's Labor Department report will likely assuage the bulls and the bears. The economy lost 131,000 jobs last month, as 143,00 temporary census jobs came to an end. The more important number—private sector employment change—showed that private employers added 71,000 jobs last month, enough to indicate economic growth is at least still chugging along, but a figure below economists' fairly mild expectations. A revision to last month's private sector data is a bigger black mark, however, erasing more than 50,000 job gains that were previously reported.
The unemployment rate remained at 9.5 percent, suggesting that the many labor force "dropouts" who lowered the rate by leaving the workforce still aren't jumping back into their job searches.
For the bears: If the economy needs to add about 150,000 jobs a month just to keep up with natural growth—and about twice as many jobs to erase recessionary losses in a timely manner—it's clear that employers are still showing a level of restraint that is preventing full recovery. Perhaps the worst news in the report was the revision to last month's job figure. The Labor Department had previously reported that private employers added 83,000 jobs last month. That figure was revised down to an anemic 31,000.
Employers aren't even adding jobs in all sectors just yet. Companies in the financial activities industry continue to slash jobs: 17,000 were cut last month, above the industry's average losses this year. Since January, the financial activities industry has averaged 12,000 jobs lost a month. That's less than the jobs lost in 2009, but nothing resembling recovery. With job cuts also in budget-strapped state and local governments, "non-Census payroll growth has averaged just [12,000] in the latest three months, which, no matter how you might try to spin it, is just plain lousy," says Joshua Shapiro, chief U.S. economist at MFR.
There were a lot of things that didn't change much last month. The number of unemployed remained steady at about 14.6 million. The number of people working part-time jobs who really want full-time work remained fairly level at 8.5 million. The number of people out of work for six months or more—the rather heartbreaking ranks of the "long-term unemployed"—was 6.6 million, only slightly less or technically "little changed" from June.
There continues to be vast numbers of discouraged workers: Some 1.2 million unemployed people have looked for work in the past year, but not in the past month because they just don't believe they'll find anything, often because they believe they lack the skills employers are looking for. Given the number of jobs that have vanished in this recession, some of those workers will need to be retrained for entirely different occupations.
"The state of the labor market is poor," says Sung Won Sohn, an economist at California State University-Channel Islands and former chief economist at Wells Fargo. "People are dropping out of the labor force. Even the temporary employment fell, indicating the sorry state of the job market. Future employment gains won't be robust and the jobless rate will fall only slowly because businesses are more cautious about hiring at this stage of economic recovery compared to previous episodes. A double-dip is not likely, but not out of the question. Employers do not want to take chances. In an increasingly globalized economy facing steep competition, employers want to stay lean and mean."
For the bulls: For one thing, the 71,000 private-sector job gains are still more than in May and June, which suggests that jobs are heading in the right direction, if slowly. Employers in the private sector have added 630,000 jobs since the start of the year, with the vast bulk of growth in March and April, before the European debt crisis.
Manufacturing employment continues to rise as seasonal layoffs in motor vehicles and parts are fewer than expected. Manufacturing added 36,000 jobs last month, a strong figure closely in line with April and May figures. Manufacturing employment has risen every month since January, which was the first increase in three-and-a-half years.
Healthcare jobs continued to grow in July, and 12,000 jobs were added in transportation and warehousing (bringing total gains to 56,000 since the transportation and warehousing hit an employment low in February.)
Also, some ammo for the bulls: The average workweek for private sector employees unexpectedly increased by 0.1 hour to 34.2 hours. The manufacturing workweek increased 0.1 hour to 40.1 hours and the average workweek for private production and non-supervisory workers grew by 0.1 hour to 33.5 hours in July.
"The report was weaker than expected—but not as disappointing as implied by the payroll employment component because of offsetting strength in hours and earning," wrote Morgan Stanley economists David Greenlaw and Ted Wieseman in a morning note. "In fact, aggregate weekly payrolls (the gauge that captures the combination of payrolls, hours and earnings) rose 0.6 percent —a tick better than we expected and matching the high seen in the prior five months."
Other job market data may be more optimistic about July, showing online job postings increasing to post-2008 highs. The Conference Board reports that online postings for job openings jumped by 139,200 in July. The total openings last month were nearly 4.3 million, up from 4.15 million in June and less than 3.3 million a year ago. Job search site Indeed.com reported that transportation sector job postings in July were more than double the same month a year ago. Indeed.com reported year-over-year postings growth in 11 out of 12 tracked sectors. Healthcare was the only sector to see postings decrease.