Jobless rate drops to 7.4%, USA
The American economy added 162,000 jobs in July, bringing the jobless rate down to 7.4%. In July 2012, 8.2% of U.S. adults were jobless.
Economists were largely disappointed with yesterday’s figures.
A good chunk of these new jobs came from the food services and retail sectors, which tend to have lower wages.
According to the US Labor Department, yesterday’s 7.4% jobless rate was the lowest since December 2008.
Economists had expected an increase in jobs of at least 180,000. Over the last twelve months, an average of 189,000 new jobs have been created in the USA monthly.
There is now concern that perhaps the pace of America’s economic recovery is losing steam. For the first time in nine months average hourly earnings have fallen.
The Wall Street Journal quoted Jim O’Sullivan, head US Economist at High Frequency Economics, who said “The trend in employment growth still looks more than strong enough to keep unemployment trending down.”
Long-term jobless rate unchanged
In July, the number of long-term unemployed stood little changed at 4.2 million. “Long term unemployed” refers to people who have been out of work for at least 27 weeks. According to the Labor Department: “The number of long-term unemployed has declined by 921,000 over the past year.”
Most economic analysts describe America’s economic growth over the last 12 month’s as “tepid” or “anemic”. That is why the Federal Reserve decided this week to carry on with the bond-buying program of $85 billion-a-month.
During the first six months of 2013, the US economy grew by an annualized rate of just 1.4%.
The Fed is expected to continue its bond-buying program until the number of jobless starts falling more steeply. Its current policy of keeping interest rates extremely low and pumping money into the economy is expected to boost investment and the creation of new jobs.
Below are some highlighted data from the Labor Department regarding the month of July 2013:
- Non-farm payroll employment rose by 162,000
- The retail trade added 47,000 new jobs (352,000 in 12 months)
- The wholesale trade added 14,000 new jobs (83,000 in 12 months)
- Financial activities employment rose by 15,000 (120,000 over 12 months)
- Food services and drinking places added 38,000 new jobs (381,000 over 12 months)
- Employment in professional and business services rose by 36,000
- Manufacturing employment remained the same, as it has done over the last year
- Non-farm employment grew by an average of 189,000 per month over the last 12 months
- Employment in health care did not change significantly in July. During the first seven months of this year, health care has added 16,000 new jobs per month, compared to 27,000 during the same period last year
- Mining, logging, construction, transportation, warehousing and government saw little change regarding employment in July
- Average hourly earnings for all private non-farm employees fell 2 cents in July, to $23.98
- The average working week dropped by 0.1 hour in July to 34.4 hours. In manufacturing it dropped by 0.2 hour to 40.6 hours
In an interview with Bloomberg, Gennadiy Goldberg, from TD Securities Inc., New York, expressed concern at the American labor market’s loss of momentum. “Earnings were a bit disappointing. Consumers really need to see wage growth to help accelerate their spending.”
Of the 162,000 jobs created last month, 117,000 were female workers.
Regarding the unemployment numbers, Labor Secretary Tom Perez made the following statement:
“Today’s report shows that our economy continues to improve, modestly but steadily. The unemployment rate inched downward to 7.4 percent, the 11th straight month under 8 percent and the lowest level in more than four and a half years, since December 2008. The private sector added 161,000 new jobs in July, marking the 41st straight month of private-sector job growth and a total of 7.3 million new private-sector jobs added over that time period.
“This report is good news, and the economic turnaround over the past four years has been unmistakable. More Americans are finding work, but we can and must do more to pick up the pace of this recovery. So President Obama has offered specific proposals that will jumpstart job growth and foster a growing economy powered by a rising, thriving middle class. The president wants to rebuild our infrastructure, invest in manufacturing innovation, create incentives for clean energy and increase U.S. exports. He has also proposed strengthening our community colleges, linking them more directly to the business community, so that workers have the skills and training to succeed in new jobs.
“Congress should join the president in a ‘common-sense caucus’ so that government contributes to a growing economy. For too long, Congress has been single-mindedly focused on an austerity agenda that has kept us in an economic straitjacket. It’s time for a grand bargain for middle-class jobs.
“My job as secretary of labor is to safeguard and expand opportunity for everyone willing to work for it. I look forward to working with the president and Congress in the coming months and years toward that goal.”