Private sector adds 154,000; unemployment rate falls to 9.1%
By Jeffry Bartash, MarketWatch
WASHINGTON (MarketWatch) — The U.S. added 117,000 jobs in July and the unemployment rate fell slightly to 9.1%, the government said Friday, in a better-than-expected report that appeared to temporarily calm jittery financial markets.
On Wall Street, stocks rose once markets opened and then bounced slightly up and down. Action in the market was much quieter than on Thursday, when the Dow Jones industrial average sank more than 500 points, a stunning decline triggered partly by fresh worries about the U.S. economy.
“The report will reduce fears that the U.S. is heading toward recession,” said Paul Dales, senior U.S. economist at Capital Economics.
Yet while employers hired more workers than economists expected, the gain wasn’t big enough to put a dent in disappointing labor-market trends.
The jobless rate has stayed above 8% for 30 straight months, the longest stretch of high unemployment since the Great Depression in the 1930s. What’s more, the drop in the unemployment rate in July stemmed mainly from a decline in the labor force as discouraged job seekers stopped looking for work.
During times of rapid growth, the U.S. typically adds at least 200,000 jobs a month, but much larger increases would be required for months on end to yank the unemployment rate back down to pre-recession levels.
The rate of hiring in July wasn’t even enough to absorb the natural increase in the labor force, which requires about 125,000 new jobs a month.
“We won’t have an immediate sell-off in the markets,” said Chris Kichurchak, vice president of Strategic Wealth Partners in Seven Hills, Ohio. “Unfortunately, the increase is not big enough.”
Economists surveyed by MarketWatch expected the U.S. to add a seasonally adjusted 75,000 jobs in July, with the unemployment holding steady at 9.2%. The payroll data does not include farm workers.
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Companies in the private sector hired 154,000 workers, but governments at all levels continued to trim jobs, putting the overall gain at the critical headline figure of 117,000.
The biggest increases occurred in health care (31,000), retail (26,000) and manufacturing (24,000). Government shed 37,000 jobs, marking the ninth consecutive decline.
Hourly wages climbed 10 cents, or 0.4%, to $23.13. Although earnings have climbed 2.3% over the past 12 months, inflation as measured by the consumer price index has risen even faster. That means workers are falling behind and have less cash to spend after paying for necessities such as food, clothing and shelter.
The number of jobs created in May and June, meanwhile, were revised up by a combined 56,000. The increase in June was revised to 46,000 from 18,000 and the gain in May was raised to 53,000 from 25,000.
The latest employment data, although better than forecast, is likely to ignite fresh calls in Washington to pass new laws to boost job creation.
