July Unemployment: Better Than Expected, Worse Than Needed

Within five minutes of the highly anticipated unemployment report that was released at 8:30 this morning, the Bureau of Labor website crashed. And stayed down for quite a while. About an hour.

At least the headline unemployment rate didn’t stay down. Investors breathed a huge sigh of relief that the main unemployment rate fell from 9.2% to 9.1%. But this report doesn’t have people dancing in the streets.

Most of the sentiment in the media today will consider the jobs report to be a positive, but only because of all the bad economic news we’ve had this week. With markets crashing Thursday in the US and Asian markets opening up in free fall as well, the level of pessimism was highly elevated going into this report. Had markets been doing well, this report is weak enough that it could have caused serious frustration. Ultimately, this jobs report is not a game changer. In relative terms, nothing changed much. The labor market is still terrible.

The Good:

  • Headline figure down from 9.2% to 9.1% for July. That number doesn’t reflect the debt deal at all, but it is nice for the White House and Congress to have going into the August recess and need to face constituents.
  • Manufacturing jobs were up, even after a weak manufacturing report earlier this week (signaling the possibility of better manufacturing news down the road). Manufacturing payrolls increased for a second straight month to 24,000, after rising 11,000 in June.
  • Nonfarm payrolls added more jobs than expected: 117,000. And private employment increased 154,000, twice as much as June’s increase, indicating a decline in government jobs.

The Bad:

  • Unemployment is still 9.1%. Dismal.
  • The labor force participation fell below 64 percent, which suggests the slight decrease in the unemployment rate is not as positive a sign as it looks. Few people looking for work with a stable number of employment means a smaller unemployment rate, but not a better labor market. The total number of unemployed, 13.9 million, is basically double the total pre-recession.
  • Nonfarm payrolls added only 117,000—enough to keep the unemployment rate steady with a declining participation rate, but not enough to decrease unemployment significantly with a rising participation rate.
  • Non-seasonally adjusted long-term unemployed persons grew from 6.058 million to 6.218 million.

The often repeated phrase in the jobs report is “little changed”, as most measurements for July stayed close to their June numbers.