| Employment Situation |
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Released On 8/5/2011 8:30:00 AM For Jul, 2011
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Prior | Prior Revised | Consensus | Consensus Range | Actual |
| Nonfarm Payrolls - M/M change | 18,000 | 46,000 | 75,000 | 25,000 to 125,000 | 117,000 | | Unemployment Rate - Level | 9.2 % | | 9.2 % | 9.1 % to 9.3 % | 9.1 % | | Average Hourly Earnings - M/M change | 0.0 % | | 0.2 % | 0.1 % to 0.3 % | 0.4 % | | Av Workweek - All Employees | 34.3 hrs | | 34.3 hrs | 34.3 hrs to 34.4 hrs | 34.3 hrs | | Private Payrolls - M/M change | 57,000 | 80,000 | 108,000 | 60,000 to 150,000 | 154,000 |
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Highlights
The economy finally got a break with better-than-expected numbers in the July jobs report. Payroll jobs advanced 117, 000, following a revised 46,000 rise in June, and revised 53,000 increase in May. Analysts had projected a 75,000 gain. Also, the May and June revisions were up net 56,000. Private sector growth was somewhat healthier as private nonfarm payrolls grew 154,000 in July, following an 80,000 rise in June and 99,000 increase in May. The median forecast was for a 108,000 boost for the latest month.
In the private sector, improvement was seen in both goods-producing and services-providing sectors. Goods-producing jobs gained 42,000, following a 16,000 rise in June. Manufacturing jobs increased 24,000 after an 11,000 rise the month before. For June, auto industry jobs gained 12,000. Construction employment rebounded 8,000 after decreasing 5,000. Mining advanced 9,000, following a 10,000 boost in June.
Plenty of pink slips were handed out in the public sector as government employment dropped 37,000, following a 34,000 decrease in June.
A rebound in the auto sector appears to be helping earnings. Wage growth picked up as average hourly earnings increased 0.4 percent, following no change in June. The market forecast was for a 0.2 percent increase. The average workweek for all workers in July was unchanged at 34.3 hours and matched the market consensus.
On a year-ago basis, overall payroll jobs in July improved to a 1.0 percent gain from 0.8 percent the month before.
From the household survey, the unemployment rate slipped to 9.1 percent from 9.2 percent in June. The July figure came in below expectations for 9.2 percent. The July dip was primarily due to a contraction in the labor force.
Today's report should relieve fears that the economy is headed back into recession. Growth is still modest but positive. And maybe the phrase "transitory" will again be seen applying to first half weakness. Equity futures jumped on the news. Treasury yields are down.
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Market Consensus before announcement
Note: Consensus median and range numbers were updated Thursday evening, August 4, to reflect forecast adjustments in response to news since July 29.
Nonfarm payroll employment in June slowed to a crawl with an 18,000 gain, following a 25,000 rise in May, and 217,000 in April. Once again, the government sector held down payroll numbers as private nonfarm payrolls outpaced the total with an increase of 57,000 in June, following a 73,000 advance in May. Goods-producing jobs edged up 4,000, following a 3,000 rise in May. Manufacturing jobs rebounded 6,000 after a 2,000 dip in May. Growth in private service-providing jobs slowed to a rise of 53,000 after a 70,000 increase the prior month. The government sector shed another 39,000, following a 48,000 drop in May. Average hourly earnings also slowed June, coming in at no change, following a 0.3 percent rise the prior month. From the household survey, the unemployment rate edged up to 9.2 percent from 9.1 percent in May.
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Definition
The employment situation is a set of labor market indicators based on two separate surveys in this one report. Based on the Household Survey, the unemployment rate measures the number of unemployed as a percentage of the labor force. Other key series come from the Establishment Survey (of business establishments). Nonfarm payroll employment counts the number of paid employees working part-time or full-time in the nation's business and government establishments. The average workweek reflects the number of hours worked in the nonfarm sector. Average hourly earnings reveal the basic hourly rate for major industries as indicated in nonfarm payrolls.
Why Investors Care
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![[Chart]](showimage.asp?imageid=21190)
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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
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![[Chart]](showimage.asp?imageid=21191)
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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
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