July Jobs Reax: Much Better Than Expected

Andrew Sullivan —  Aug 3 2012 @ 1:05pm


Joe Weisenthal provides a pithy summary of today's BLS report:

There were 163K net new jobs, well ahead of last month, and well ahead of expectations. Analysts had only been looking for 100K new jobs. PRIVATE payrolls surged by 172K. That's well ahead of the 110K that was expected. But there is a dark side. The unemployment rate rose to 8.3% although this was due to a miniscule move and a rounding error. And U-6, which is a broader measure of unemployment that includes discouraged workers and the underemployed, rose to 15.0% from 14.9%.

Phil Izzo details that discrepancy between jobs gained and the higher unemployment rate:

The key reason is because the two numbers come from separate reports. The number of jobs added — the 163,000 figure — comes from a survey of business, while the unemployment rate comes from a survey of U.S. households. The two reports often move in tandem, but can move in opposite directions, especially in months such as July where there are big seasonal issues at play. This month, the household survey was telling a darker tale than the poll of establishments.

Binyamin Appelbaum has more on the month of July, which is "annually adjusted by a larger amount than for any other month save January, when holiday workers lose their jobs." Mataconis puts today's numbers in further context:

[M]ost analysts were expecting a relatively weak net jobs numbers somewhere between 50,000 and 100,000. Given the numbers we’d seen in April, May, and June, and the GDP report that showed just how weak the economy was going in to the third quarter, that certainly seemed to be the best guess. Instead, we got one of the best jobs reports we’ve seen since February, albeit one that still has it’s own share of weaknesses. …

163,000 jobs isn’t enough to keep up with population grown and hardly enough to signal a real recovery. For the second, we’d need to be seeing job growth averaging at 250,000 per month. Instead, so far in 2012 we’ve averaged 151,000 new jobs per month which slightly worse than the 153,000 new jobs per month [in 2011].

Brad Plumer searches for signs of growth:

Manufacturing added 25,000 jobs last month. The automobile industry had fewer layoffs than usually occurs at this time of year. The professional and business services sector added 49,000 jobs in July. Leisure, hospitality, and food services also saw a bump, with 29,000 new jobs. Meanwhile, hospitals and outpatient care sectors continued to hire new workers.

Josh Sanburn looks to the Fed:

The mixed bag of numbers could give the Federal Reserve another reason to further stimulate the economy, perhaps with another round of quantitative easing. But the Fed isn’t likely to take any action before its policymakers meet in mid-September. The markets were up sharply Friday morning, partly because of the semi-positive jobs news, but also because of the perception that the numbers were not strong enough to dissuade the Fed from further monetary stimulus.

Chait comments on the Fed's inaction earlier this week:

[D]espite a weakening economy, it still would not take steps to stimulate growth. The Fed may not like mass unemployment, but it dislikes inflation even more, and in its calculus, the hypothetical prospect of the latter outweighs the immediate reality of the former.

Jared Bernstein downplays suggestions that the fiscal cliff is a major factor in today's report:

I actually think the bigger story is the negative feedback loop between weak job growth, weak paychecks, weak consumer spending, weak demand, weak job growth—and you’re back at the start of the loop. To break the loop, in the near term we need to target jobs, not debt and deficits.  Exhibit A in terms of proving that assertion, and from the perspective of what NOT to do, is Europe and the UK.  Fiscal policy, however, is frozen both there and here.

Felix Salmon provides a good primer on how politicians will spin today's numbers:

[T]he two parts of the report tell differing stories: the headline payrolls number was higher than most people expected, even as the headline unemployment rate went up.

Ryan Avent also sees "something for everyone":

For President Barack Obama, the payroll employment number is surely a relief. Employment rose by an estimated 163,000 jobs in July, up from a distressingly low gain of 64,000 in June (revised down from last month's estimate of 80,000). Private employers did better still, adding 172,000 jobs, helping make up for the continued declines in government payrolls. …

For Mr Obama's political opponents, including his Republican challenger Mitt Romney, the household survey data offers something to work with. The unemployment rate ticked up from 8.2% to 8.3% in July—statistically unchanged but enough for politicians to claim things are headed in the wrong direction. Household data showed a decline in both employment and the size of the labour force. The employment-population ratio reversed recent gains, dropping back to 58.4% from 58.6%.

Ed Morrissey's take:

National Journal’s Jim Tankersley writes that this will give Barack Obama a boost on the campaign trail, but "the pace of growth still not strong enough to bring down the unemployment rate over time."  Certainly the last part is objectively true, and I think he may be right about the boost for Obama, too — but anyone familiar with these numbers won’t buy it.  If this is what passes for good economic news for the Obama administration, it’s more of an indictment than a boost.  However, most people will hear "163,000" and think that sounds pretty good.

Bill McBride provides plenty of charts, including the one above.