Slower-than-expected job growth in the private sector, coupled with the loss of thousands of temporary Census jobs, left the national unemployment rate steady at 9.5 percent during July, the federal government reported this morning.
Total non farm payroll employment declined by 131,000. Federal government employment fell, as 143,000 temporary workers hired for the decennial Census completed their work.
Private-sector payroll employment edged up by 71,000, more than double the downwardly revised figure for June but well below the forecast of 90,000 new jobs.
The consensus expectation was for a slight uptick in the unemployment rate, which didn’t happen even though the employment numbers were worse than expected. The drop in government employment was greater than expected – the Census jobs were temporary, but there have also been a lot of state and local layoffs with the new fiscal year beginning in many jurisdictions.
More surprising was the weak private sector job creation, which came in a bit below even the more pessimistic estimates. First-time unemployment claims are also on the rise.
A particularly negative sign in the July report is a decline in temporary hiring, which is considered a precursor of broader hiring into regular jobs. Manufacturing continues to show relative strength, boosted by improvement in the automotive sector.
The disappointing job numbers confirm the results of multiple reports this week that suggest a slowing of the already tentative economic recovery.
AIM reported on Monday that lingering doubt about the strength of the economic recovery caused confidence among Massachusetts employers to take its largest one-month drop in July since the depths of the recession in February 2009. The AIM Business Confidence Index (BCI) dropped 5.2 points in July to 48.5, falling below 50 – neutral on its 100-point scale – after moving into positive territory in May and June.
Massachusetts remains slightly stronger than the nation as a whole, with a 9 percent unemployment rate and a 6.4 percent increase in gross state product during the second quarter. Economists expect that growth rate to slow to approximately 4 percent during the second half of the year.
The public is pretty discouraged, and the graph below shows why: The proportion of the United States population that is employed has fallen from almost 65 percent in 2000 to 58 percent this year. The American job creation machine, so powerful in the 1990s, has sputtered and stalled over the past decade.
We never fully recovered from the “dot-com” recession (a fact evident in Massachusetts, but concealed at the national level by workforce growth). The recession just ended (supposedly) was far more serious nationally, and has been followed by a so-far jobless recovery. Concerns about job prospects are what has driven consumer confidence back down – and there is obviously a basis for those concerns.
Labor demand continues to be weak – there aren’t enough new jobs being created to raise hiring much above separations (layoffs and quits). We need about twice the private-sector gains of recent months to keep pace with natural growth in the workforce. This is a long-term issue as well as an immediate problem.
As one senior business economist notes, “Structural unemployment may well increase over time if large numbers of people remain without a job for long periods of time, and thus lose their skills and attachment to the labor force.” But, he adds, “it is not clear that this process has started yet."