Private U.S. firms added jobs in July at anemic rate

McClatchy NewspapersAugust 6, 2010 

WASHINGTON — Private-sector employers added 71,000 jobs in July and the unemployment rate stood unchanged at 9.5 percent, the government reported Friday, in a ho-hum jobs report that underscored that the U.S. economic recovery is losing steam.

The U.S. economy shed 131,000 jobs overall last month, the Bureau of Labor Statistics reported, led by 202,000 positions in federal, state and local government, 143,000 of them temporary census jobs. Government statisticians also lowered their initial June employment numbers by 100,000, an exclamation point on a host of indicators that point to slower economic growth ahead.

The anemic jobs-growth rate is insufficient to reduce unemployment. Coming out of the deepest downturn since the Great Depression, the economy needs to add about 200,000 jobs each month to reduce the unemployment rate.

“The economic recovery remains very fragile as underlying job growth is not sufficient to forestall further increases in unemployment. Unemployment held steady last month, but only because discouraged workers are stepping out of the work force altogether,” said Mark Zandi, the chief economist for forecaster Moody’s Analytics in West Chester, Pa. “Unemployment is likely to go back over 10 percent late this year or early in 2011. Wage growth remains under intense pressure given the high unemployment.”

The lackluster jobs report came on the heels of the Commerce Department’s estimate that the U.S. gross domestic product _ the value of all goods and services produced — rose at a sluggish 2.4 percent annual rate from April through June.

Combined with weak retail sales and low measures of consumer confidence, forecasters predict weak growth in coming months.

“Employment lags GDP, and many forecasters are revising down their forecasts for GDP growth for the second half of this year, given the soft tone of the recent data. That suggests to me we may be several months away from the vigorous growth in employment that you would like to see in this phase of recovery to propel it,” said Joel Prakken, the chairman of Macroeconomic Advisers, a consulting firm in St. Louis.

President Barack Obama accentuated the positive Friday.

"The road to recovery does not follow a straight line. Some sectors bounce back faster than others," he said. "The fact is we have now added private-sector jobs every month this year instead of losing them, as we did for the first seven months of last year. And that’s a good sign."

Still, Friday’s report contained signs of continued stress on American households. Among the most troubling was a dip in temporary employment, which had risen steadily since last November but fell by 5,600 jobs in July. Temporary employment is an important harbinger of future hiring, since many companies seek temp workers before they commit to providing full-time jobs with benefits.

The construction sector resumed its downward slide, shedding another 11,000 jobs in July.

There was no erosion in the number of long-term unemployed, people who've been jobless for 27 weeks or more. It was mostly unchanged at 6.6 million. Long-term jobless people make up 44.9 percent of the unemployed.

Additionally, 2.6 million people remained marginally attached to the work force in July. That’s 340,000 more than in July 2009. This is a measure of people who want to work and aren’t currently in the labor force but have looked for work sometime in the past year.

Some silver linings emerged from the otherwise forgettable July jobs report. There was a slight uptick in hours worked per week_ a tenth of an hour, to 34.2 hours per week — a sign that assembly lines are humming as some workers put in longer hours. Average hourly earnings rose slightly — by 4 cents, to $22.59.

Manufacturing also sustained momentum. Manufacturers added 36,000 jobs, the seventh straight month of job growth, some of it tied to strong exports. A quarter of the goods that are manufactured in the United States are sold abroad.

“The increase in hours worked per week is encouraging, as is the now-steady increase in manufacturing employment. With strong corporate earnings and very competitive labor, job growth should pick up by next spring,” Zandi said.

For now, though, the sluggish economy is prompting calls for more government stimulus.

“The economic case for more government action to create jobs is about as clear as they come,” said Heidi Shierholz, an economist at the liberal Economic Policy Institute, a research center in Washington.

Next week the House of Representatives will pass a $26 billion measure to help preserve state and local government jobs, especially teachers’. State governments shed a net 10,000 jobs in July, and local governments axed 38,000 workers.

More than 27,000 of the lost local jobs were in education. In all, almost 30,000 teachers on the state or local level were let go nationwide in July. The legislation will save an estimated 160,000 teachers’ jobs, by preventing further layoffs and allowing some rehiring.

While growth remains slow , few economists project a slide back into recession.

“There is very little more that policymakers can do to support the job market and broader economy over the next six to 12 months. There are a few small things that would be helpful, like empowering the Small Business Administration to make more small business loans, but to a significant degree the die has been cast,” Zandi said.

JULY JOBS BY THE NUMBERS:

_ Government, down 202,000.

_ Financial services, down 17,000.

_ Professional and business services, down 13,000.

_ Construction, down 11,000.

_ Temporary help services, down 5,600.

_ Leisure and hospitality, up 6,000.

_ Retail, up 6,700.

_ Transportation and warehousing, up 12,200.

_ Trade, up 25,000

_ Health care, up 26,600.

_ Manufacturing, up 36,000. ON THE WEB

Bureau of Labor Statistics report

Employment by sector

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