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Employment Situation  
Released On 8/7/2009 8:30:00 AM For Jul, 2009
PriorConsensusConsensus RangeActual
Nonfarm Payrolls - M/M change-467,000 -300,000 -375,000  to -190,000 -247,000 
Unemployment Rate - Level9.5 %9.7 %9.5 % to 9.8 %9.4 %
Average Hourly Earnings - M/M change0.0 %0.1 %0.0 % to 0.3 %0.2 %
Av Workweek - All Employees33.0 hrs33.1 hrs33.0 hrs to 33.2 hrs33.1 hrs

Job losses came in much lower than expected and point to being at or near the end of recession. And the unemployment rate surprisingly edged down. Nonfarm payroll employment in July shrank 247,000, following a revised decline of 443,000 in June and a revised drop of 303,000 in May. The July drop in jobs was not as severe as the consensus forecast for a 300,000 decrease. June and May revisions were up a net 43,000. The easing in job losses was seen in both goods-producing and service-providing sectors.

The easing in job losses was broad-based. By major categories, goods-producing jobs fell 128,000 in July, following a 223,000 loss the month before. The July decline was led by a 76,000 drop in construction employment while manufacturing dipped only 52,000. Within manufacturing, motor vehicles actually rose 28,000. Service-providing jobs contracted by 119,000 in July after falling 220,000 in June. The trade & transportation subcomponent fell 87,000. Education & health services actually rose 17,000 with leisure & hospitality also up 9,000 and government up 7,000.

On a year-ago basis, payroll jobs were down 4.2 percent in July, compared to down 4.1 percent the month before.

Wage inflation returned more to normal in July as average hourly earnings rose 0.2 percent after no change June. The latest gain matched the consensus forecast for a 0.2 percent rise. The average workweek edged up to 33.1 hours from 33.0 hours in June.

From the household survey, the civilian unemployment rate unexpectedly slipped to 9.4 percent from 9.5 percent in June and was below the consensus projection for 9.7 percent. The decline was due to a sizeable drop in the labor force.

Today's report is very good news for equity markets. Job losses are getting smaller and the unemployment rate actually slipped. Without a doubt, the July numbers should be a big psychological boost for equities. Meanwhile, bond prices are down.

Consensus Outlook
Nonfarm payroll employment in June declined 467,000, following a fall of 322,000 in May. However, layoffs of temporary workers for the upcoming 2010 census accounted for a notable part of June's job losses. In June, the average workweek slipped from 33.1 hours in May to an extremely weak 33.0 hours-the lowest level on record for the series, which began in 1964. Average hourly earnings were unchanged after rising 0.2 percent in May. The civilian unemployment rate rose to 9.5 percent from 9.4 percent in May with the latest number the highest since August 1983.

The most closely watched of all economic indicators, the employment situation is a set of monthly labor market indicators based on two separate reports: the establishment survey which tracks 650,000 worksites and offers the nonfarm payroll and average hourly earnings headlines and the household survey which interviews 60,000 households and generates the unemployment rate.

Nonfarm payrolls track the number of part-time and full-time employees in both business and government. Average hourly earnings track employee pay while the average workweek, also part of the establishment survey, tracks the number of hours worked. The report's private payroll measure excludes government workers.

The unemployment rate measures the number of unemployed as a percentage of the labor force. In order to be counted as unemployed, one must be actively looking for work. Other commonly known data from the household survey include the labor supply and discouraged workers.  Why Investors Care
During the mature phase of an economic expansion, monthly payrolls gains of 150,000 or so are considered relatively healthy. In the early stages of recovery though, gains are expected to surpass 250,000 per month.
Data Source: Haver Analytics
The civilian unemployment rate is a lagging indicator of economic activity. During a recession, many people leave the labor force entirely, so the jobless rate may not increase as much as expected. This means that the jobless rate may continue to increase in the early stages of recovery because more people are returning to the labor force as they believe they will be able to find work. The civilian unemployment rate tends towards greater stability than payroll employment on a monthly basis. It reveals the degree to which labor resources are utilized in the economy.
Data Source: Haver Analytics

2009 Release Schedule
Released On: 1/92/63/64/35/86/57/28/79/410/211/612/4
Release For: DecJanFebMarAprMayJunJulAugSepOctNov

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