Employers bucked the recent slowing trend in hiring in July, sending payrolls up by 163,000, the largest payroll gains since February, according to this morning's jobs report from the BLS. The private sector was up 172,000, with most industries, including manufacturing, adding more jobs than in the prior few months.
On the other hand, the Household Survey, from which the unemployment rate is drawn (the payroll data come from a survey of workplaces), told a less optimistic story about July, with unemployment ticking up slightly and the share of the population employed falling.
So, what is one to make of such a tale-of-two-surveys?
- Don't read too much into one month as one month does not a new trend make. July's reversal of the recent downshift in payrolls is very welcomed, but let's sees if it hangs around.
- Regarding employment growth, the payroll survey is a lot more reliable on a monthly basis than the household survey -- its sample size is much larger and while all these monthly data are noisy, the payroll is less so than the household. (The household survey goes to 60,000 households; the establishment survey, to about 140,000 businesses and government agencies representing about 490,000 establishments.)
- Re: payrolls, when I find myself scratching my head about the underlying trend in a series that's jumping around, I take an average, and the jumpier the monthly changes are, the longer the average. So far this year, average monthly payroll growth has been about 150,000; over the past three months, the average has been about 100,000.
- Those growth numbers are about what it should take to keep the jobless rate around where it is, though continued months like July and it should start coming down.
- Average hourly earnings are up 1.7% over the last year, which is actually the same rate as inflation (that's June12/June11 for inflation since we don't have July's price report yet). Flat real paychecks are better than falling paychecks, but that's a slow pace of wage growth, consistent with all the slack in the job market.
- Bottom line: a nice pop on payrolls. Probably the most important thing to take from this morning's report is that the downshifted trend of the last few months may not be as baked into the cake as we feared.
But keep your powder dry on this one. There are lots of other economic headwinds out there, not least of which is a GDP growth rate below trend, and that's usually associated with weaker job growth numbers than we saw from the payroll report.
Update (11:00AM EST, 8/3/2012):
Diagnosis: A Bad Loop
Though payrolls showed a bit more muscle in July -- a very welcomed development if it persists -- the expectation is for the economy to continue to slog along, slowly climbing out of the Great Recession.
The most frequently cited reasons for the continued weakness in the job market are Europe and budget uncertainty. From this AM's Washington Post:
Given the government budget conflicts and the recession in Europe, the lackluster state of the U.S. economy seems likely to persist, economists said, and keep the economy in the doldrums.
From this AM's New York Times:
Economists are not expecting job growth to pick up much anytime soon. Concerned about the European debt crisis and the draconian American fiscal tightening scheduled for the end of the year, companies are starting to retrench.
Sure, those are real, ongoing concerns, though I think the extent to which budget madness -- and yes, that's a good description of the fiscal cliff -- is slowing the economy is very speculative (not saying it's nothing, but it's pure anecdote).
I actually think the bigger story is the negative feedback loop between weak job growth, weak paychecks, weak consumer spending, weak demand, weak job growth -- and you're back at the start of the loop.
To break the loop, in the near term we need to target jobs, not debt and deficits. Exhibit A in terms of proving that assertion, and from the perspective of what NOT to do, is Europe and the UK. Fiscal policy, however, is frozen both there and here.
That leaves monetary policy, but even were the Fed willing to push harder, there's a real concern they're pushing on a string. Their prime target is interest rates, and the cost of borrowing isn't what's holding back hiring. That would be demand, and more of it would actually give the Fed's policies more traction, which is why you constantly hear gentle Ben asking Congress for some fiscal help (i.e., jobs measures) to complement his team's monetary juice.
But Congress isn't listening, and therein lies the problem.
This post originally appeared at Jared Bernstein's On The Economy blog.
Follow Jared Bernstein on Twitter: www.twitter.com/@econjared
1. Cancel NAFTA, the WTO and ridicilous trade agreements with China.
2. Bring back tariffs as they worked well for the past 200 years.
3. Make e-verify mandatory as the current voluntary program is a joke for obvious reasons.
Globalization is a choice not a fact. For example, Apple shipped its new American technology and equipment to China to produce product and re-import duty free which is why its stock went from $60 share to $600. Apple's sucess is good for China and Wall Street, not America and Main Street. Until the playing field is level again, all the talk about jobs is just blowing in the wind.
When BO was elected, total Payroll jobs stood at 133,561,000. Today, it is 133,245,000 - 316,000 less than when he took office. BO could be the first president since FDR to have fewer payroll jobs on election day than when he took office - and the sad thing is that there are people who support him. Millions are suffering, and there are people who believe that BO is doing a good job. Pathetic.
today it is at 8.3%
a rise of 0.0%
during bush's first full month as pres (feb2001) unemployment was at 4.2%
during the last month with bush as pres (jan2009) unemployment was 7.8%
a rise of 3.6%
Amazingly, Romney blamed the internet bubble for the bad economy under President Bush: “They also recognize that the internet bubble burst. These things came together creating a perfect storm that meant a huge job loss.”
Amazingly, Romney
That's 1.8M new jobs a year, 7.2M in four. Four more years of Obama means 7+M new jobs.
People really think a slight uptick means better and a slight drop means worse?
Is the American public that clueless?
Don't they?
I particularly love this part of Jared's analysis: "Don't read too much into one month as one month does not a new trend make."
The Obama Recovery has brought us 41 straight months of joblessness over 8%, an all time US record. At least 31 of those months, the Obama adminstration has used these words, why, they are Jared's words too - "it is important not to read too much into any one monthly report." http://pjmedia.com/tatler/2012/07/06/thirty-times-the-obama-administration-admonished-americans-not-to-read-too-much-into-a-montly-jobs-report/
While Jared reads this depressing report as being GREAT NEWS, HOORAH FOR OBAMA, the rest of us read this as:
- 8.3% joblessness, a continuation of the trend of rising unemployment since April 2012,
- 150,000 people left the workforce last month, which means there were only 13,000 NEW jobs created last month,
- Poverty in the US is the highest since 1962,
- Food Stamp rolls are at all time highs.
If one lives outside the Obama Propaganda Bubble, he sees a depressing report of misery and hopelessness across this once great country.
Shame on propagandists like Jared Bernstein for trying to deceive us with his lies and half-truths.
I see your talking about Jared's schooling again, but you never answered my question concerning why anyone should ever consider anything Ayn Rand wrote since she was not schooled in economics either. The answer is, what people learn after school is a important as what they learn in school. Schooling teaches you how to learn. it doesn't teach you everything you will ever know.
F&F
Are you talking about all those governors of states that are drowning in deficits, which are unconstitutional in those states? Those governors?
You think maybe they should follow the lead of Illinois? Illinois, where income tax increases chase businesses out of the state and cigarette tax increase result in far, far less revenue from cigarettes because everybody imports, illegally, cigarettes from other states where the state tax is several dollars less.