A Bettter-Than-Expected-Though-Still-Pretty-Weak Jobs Report

August 5th, 2011 at 8:49 am

The nation’s payrolls increased by 117,000 last month, with the private sector posting a stronger gain of 154,000, its best month since April.  Job gains for May and June were revised up by a combined 56,000, and hourly wages got a decent bump, up 0.4% over the month.

The unemployment rate ticked down slightly, from 9.2% to 9.1% but that decline was due to fewer people looking for work, not more people finding jobs (note that the payroll data and the unemployment data come from different surveys).  The share of the population working–a good proxy for employers demand for workers–also ticked down slightly, to 58.1%, the lowest rate since July 1983–28 years ago!

Still, the job and wage gains were better than expected and such expectations matter a lot right now.  Fear feeds fear in this hyper-skittish market environment, and today’s jobs numbers should help calm some jittery nerves and dampen some destructive volatility.

Of course, gains of this magnitude along with what is really an unfavorable result on the unemployment rate—it doesn’t help if it falls because more people give up their job search—don’t change the overall story one bit.  The economy is growing, but much too slowly to provide working families the jobs, hours or work, and paychecks they need to get ahead. 

To see this more clearly, it’s useful to average over the past three months, in order to smooth out some of the statistical noise in these monthly data.  If you do so, you get average monthly private sector gains of 111,000 over the past three months, compared to 240,000 over the prior three months, so no question that employment growth has sharply slowed.

One important negative trend continues unabated in today’s data: the loss of state and local jobs, as budget contraints, no longer offset by federal help, continue to force layoffs.  States, cities, and towns laid off 39,000 workers in July (though this loss was largely due to the temporary gov’t shutdown in Minnesota last month) and 340,000 over the past year.

More details to follow and I’ll link to my CBPP colleague Chad Stone’s analysis in a few hours.

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4 comments in reply to "A Bettter-Than-Expected-Though-Still-Pretty-Weak Jobs Report"

  1. marc sobel says:

    This is the same empty rhetoric about recovery, as “green shoots”, “recovery summer”, and I think in non-economic mode that all time favorite “stay the course”

    As you say “The economy is growing, but much too slowly to provide working families the jobs, hours or work, and paychecks they need to get ahead. ”

    We haven’t solved the problem. We have no indication that the Administration is considering any of the dozens of things that it could do without Congressional authority (redoing HAMP, Renting foreclosed Fanny/Freddy homes etc.)

    I have no faith that the Administration cares about anything except being re-elected and continuing Ronald Reagan’s program of transforming America.

  2. malcolm says:

    I am confused. If the private economy added 240,000 jobs per month, on average, during 2 of the nmonths of the first quarter, wht was growth in the quarter at something like .4% at an annualized rate?

    • Jared Bernstein says:

      There’s a lag between growth and jobs of 6-12 months. In the first half of 2010, real GDP was growing at about 4%, so you’d expect to see faster growth by the beginning of this year.

      • malcolm says:

        Tank you.

        I guess I have a production function view of the world. If we hired workers, I would have expected to see output — why else are workers hired? I guess the data shows that growth “causes” hiring but
        I find it hard to get my head around the idea that companies will increase their costs and hire workers without reaping a benefit from that hiring.