The latest numbers are pretty dismal:
The economy added 162,000 jobs in July, according to government data released this morning, helping to bring the nation’s unemployment rate down but still short of what analysts had expected. The Labor Department reported robust hiring in industries such as retail, trade and professional services. But key sectors, including manufacturing and construction, were essentially unchanged. The jobless rate fell to 7.4 percent, although part of the decline was due to workers dropping out of the labor force. …
“Overall this is not a strong labor report,” said Alan MacEachin, an economist at Navy Federal Credit Union. The data are “consistent with a sluggish, lackluster economy.”
Chad Stone illustrates the numbers with a slew of charts:
Today’s disappointing jobs report reflects a familiar pattern.
Though private employers added jobs for the 41st straight month, nonfarm payroll employment remains lower than at the December 2007 start of the recession (see chart) — and well below what’s required for full employment. The unemployment rate fell to 7.4 percent, but as Federal Reserve Chairman Ben Bernanke stated recently, the current unemployment rate “overstates the health of our labor markets.” In particular, the share of the population with a job remains stuck near levels at the depth of the recession.
Yes, the economy has been growing, but not fast enough to generate a robust jobs recovery that not only puts job seekers back to work more quickly but also convinces more people who would like a job to look for one.
The best news in the report may be for teachers, who lost tens of thousands of jobs over the course of the economic downturn. Today’s report indicates that local governments hired over 10,000 people in the education sector, offsetting 4,000 other local government job losses. Together, local government gains offset modest losses at the state (-3,000) and federal (-1,000) levels. Perhaps the worst news, though, is that hourly earnings fell — slightly. Down 0.1 percent.
The report weakens the case that the Federal Reserve should begin tapering the support its been providing to the economy for several months — but the top line drop in unemployment rate significantly masks that fact.
Yglesias’ two cents:
A lot of professional forecasters who’d been looking at other aspects of the data anticipated a better number than this. And perhaps they’ll be vindicated when revisions are in. These numbers really do move quite a bit as more information becomes available. But, of course surprises, on the downside are possible as well as surprises on the upside. The fact that this happens is a reminder of how insane it is that we’ve had months of speculation about when the Federal Reserve is going to start “tapering” its quantitative easing bond purchases.
Bill McBride refers to the above chart:
This shows the depth of the recent employment recession – worse than any other post-war recession – and the relatively slow recovery due to the lingering effects of the housing bust and financial crisis.
He follows up with a comprehensive review of the new report here.