WASHINGTON — A day after stocks plunged on concerns
about a weakening economy, the government released a
better-than-expected employment report showing that non-farm payrolls
rose by 117,000 jobs in July and the jobless rate ticked down slightly
to 9.1 percent.
The report sparked a quick morning rally on Wall
Street the day after the Dow Jones industrial average shed more than 500
points during a volatile day of trading. But the Dow’s surge of more
than 170 points in the first minute of trading was short lived, as the
index soon went negative, largely on fears of the impact of Europe’s
financial crisis.
Mark Zandi, chief economist for forecaster Moody’s
Analytics, said the jobs report “suggests that the economy will skirt
recession,” though it remained to be seen whether it would offer the
relief he said it should be to wary investors. “The better job number
was critical to quell the turmoil in financial markets and shore up
flagging confidence,” he said.
The brightest spot in the government report was
private-sector hiring. It came in at 154,000 jobs in July. But the
overall hiring number was dragged down by 37,000 lost government jobs,
most of it at the state and local level.
Health care, retail sales and manufacturing all
showed healthy hiring during July, respectively adding 31,300, 25,900
and 24,000 new jobs. The growth in manufacturing employment was a relief
because a key gauge of manufacturing activity released on Monday had
shown near-recession levels. The retail sales hiring is consistent with
the better-than-expected July sales numbers reported by major retailers.
The Bureau of Labor Statistics also revised upwards
its previous estimates for employment in June and May. June had come in
at a horrible 18,000 jobs. That was revised upwards Friday to 46,000,
still not great but better than first reported. Similarly, May’s numbers
had been revised down last month to a weak 25,000 but on Friday, based
on new incoming data, they were revised upward to 53,000.
More important were revisions to private-sector
hiring, which in May is now thought to have been 99,000 and in June
80,000. The jobs reports for both of those months were dragged down
again by government layoffs.
Friday’s jobs report showed the U.S. economy moving forward despite what have been some significant headwinds to growth.
“The economy is struggling but it is weathering the
storm created by higher oil prices, fallout from the Japanese quake, and
the hit to confidence from the debt ceiling spectacle,” Zandi said.
It still faces headwinds from Europe’s debt crisis,
which began with financial problems in Greece but has now spread to
worries about big economies such as Italy and Spain. The widening
problems across the Atlantic, and the seemingly inconsistent policy
messages from European leaders, are weighing heavily on global financial
markets.
These fears drove U.S. stock indices back down into negative territory within 90 minutes of the open.
There was still plenty of hurt in Friday’s jobs
report. The BLS reported that the number of persons unemployed for less
than five weeks fell by 387,000 but that just offset the similar
increase during the prior month. More importantly, the number of
long-term unemployed — Americans who’ve been jobless for 27 weeks or
more — was 6.2 million in July, virtually unchanged from the previous
month. The long-term unemployed still account for 44.4 percent of all of
the jobless.
Under the debt ceiling deal reached by Congress this
week, there was nothing to indicate that benefits for the long-term
unemployed would be extended. That could push millions of the long-term
jobless onto public assistance programs in their states, during a time
when state governments are slashing their budgets and laying off
workers.
Speaking on CNBC television Friday morning, House
Majority Leader Eric Cantor, R-Va., said his party has no interest in
extending benefits any further and would focus on creating jobs — a goal
of both parties that has proven illusive in the aftermath of the Great
Recession.
The White House welcomed the surprisingly good
report, but didn’t run a victory lap. On his final day on the job,
Austan Goolsbee, head of the Council of Economic Advisers, called on
Congress to take steps soon to help push employment.
“Bipartisan action is needed to help the private
sector and the economy grow — such as measures to extend both the
payroll tax cut and unemployment insurance, as well as passing the
pending free trade agreements with re-employment assistance for
displaced workers, the patent reform bill, and a bipartisan
infrastructure bill to help put Americans back to work,” he said in a
statement.
JULY BY THE NUMBERS:
—Retail, up 25,900
—Professional and business services, up 34,000
—Leisure and hospitality, up 17,000
—Health care, up 31,300
—Manufacturing, up 24,000
—Construction, up 8,000
—Transportation and warehousing, up 1,100
—Financial services, down 4,000
—Temporary help services, up 300
—Government jobs, down 37,000
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(c) 2011, McClatchy-Tribune Information Services.
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