The Labor Department reported that U.S. employers added 162,000 jobs in July after a downwardly revised gain of 188,000 in June and the jobless rate fell from 7.6 percent to 7.4 percent, however, much of the lower unemployment rate was due to workers leaving the labor force rather than finding jobs.
Growth in payrolls during July was less than the consensus estimate of 175,000 and data for both May and June were revised downward by a total of 26,000. Last month’s job gains came in well below the average increase of 198,000 in payrolls during the first six months of the year, so, this was clearly not a stellar report.
The household survey showed that the jobless rate fell to its lowest level since December 2008, however, the improvement was due more to the 240,000 workers who left the labor force than to the increase of 227,000 in people counted as employed. The number of people counted as unemployed fell by 240,000 and, collectively, these factors caused the labor force participation rate to fall from 63.5 percent to 63.4 percent.
A broader measure of under-employment that includes those who have given up looking for work and those settling for part-time work instead of full-time work fell from 14.3 percent to 14.0 percent, up from the average level of 13.8 percent seen earlier in the year.
Returning to the establishment survey, retail trade payrolls accounted for a net gain of 46,800 within the overall gain of 63,000 for the trade, transportation, and utilities category while professional and business services payrolls saw broad-based gains of 36,000.
Employment at restaurants and bars jumped by 38,400, offsetting losses elsewhere in the leisure and hospitality group where payrolls increased by just 23,000.
Elsewhere, gains and losses were relatively small as a decline in nonresidential construction offset gains in residential building for an overall drop of 6,000 in construction payrolls and the number of government jobs rose for the first time in many months, up 1,000.
Source: Iacono Research
