Unemployment rate saw a decrease in July

Yes. The numbers are out. And to everyone’s surprise the US has shed lower than expected 247,000 nonfarm payrolls for the month of July.  This is also a third lower than the 371,000 job losses ADP released on Wednesday.  What’s more, while people expected the unemployment rate to climb to 9.6%, it instead went the opposite direction to go down to 9.4%.  Some will take this as a signal that the economy is recovering, a green shoot that is happening.  The 247,000 job losses put the total unemployment to 6.7m since December of 07.  From May to July, job losses averaged 331,000 per month, almost half the average from November to April.

Two other positives on this report: In July, the average workweek of production and nonsupervisory workers on private nonfarm payrolls edged up by 0.1 hour to 33.1 hours. The manufacturing workweek increased by 0.3 hour to 39.8 hours. This is matched by an increase in the average hourly earnings of production and nonsupervisory workers on private nonfarm payrolls.  It was higher by 3 cents, or 0.2 percent, to $18.56. Over a one year period, average hourly earnings are 2.5 percent higher.

See the official release from the BLS.
Of course, this doesn’t mean we’re moving downwards from here.  We only have to go back to the story of increasing consumer loan defaults to acknowledge further job losses in the future.  This is where the difference between job losses and job growth comes in.  Even as a better-than-expected number, 274,000 is still a big number and we’re not even assured that the trend is to move downward.  This could simply be a bump in this rising unemployment rate.  While sales of businesses are also seen to be stabilizing, many of these are brought about by cost cutting and not an improvement in their topline.  Weak consumer spending will continue to hit the operations and finances of retailers all over, which could result in further job cuts.  Glimmers of hope for the upcoming jobs report might come from the health care sector (still) as well as automakers, who are benefitting so much from the government’s cash for clunkers program.

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