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Economy in Brief

July Payrolls a Bit Light, Revisions Minor
by Tom Moeller August 3, 2007

Nonfarm payrolls grew 92,000 during July. The increase was a bit below the Consensus forecast for a 128,000 rise and the prior two months' gains were revised slightly downward.

The three month change in payrolls slowed to 135,000 on average. That's about equal to the 136,000 average change so far this year but below the average of 189,000 last year and 212,000 during 2005.

The unemployment rate moved up to 4.6% last month from 4.5% during June. Household employment fell 30,000 (+1.2%) following a 197,000 rise during June. The labor force jumped another 159,000 (1.1% y/y). The labor force participation rate held steady at 66.1%.

From the establishment survey, private service sector jobs posted a 132,000 (2.0%) gain after a 114,000 June rise which was revised slightly higher. Last year’s average gain was 159,000 per month. Retail employment actually fell a modest 1,200 (+0.5% y/y) during July and the average this year has been just 8,000 per month after an outright decline of 2,700 per month during 2006. In the financial sector, jobs recovered from the prior month's 2,000 decline and grew 27,000 (1.4% y/y) for an average gain of 7,000 this year versus 16,000 last year. Professional & business services employment rose 26,000 after June's upwardly revised 7,000 increase. The average gain this year has been 19,000 per month, off from last year's average of 42,000.

Factory sector payrolls fell 2,000 (-1.2 y/y) and jobs have fallen in every month during the last twelve. Construction employment reversed the prior month's downwardly revised 3,000 increase with a 12,000 (-0.7% y/y) decline. Construction jobs have fallen 5,000 per month this year versus an average 11,000 increase per month during 2006.

Government payrolls fell 28,000 (+1.1% y/y) and in 2007 have risen an average 16,000, near the per month average last year of 20,000.

Average hourly earnings increased 0.3% and the 0.4% gain in June was upwardly revised. Factory sector earnings rose 0.3% (3.0% y/y) and private service producing earnings rose a firm 0.4% (4.1% y/y) after June's upwardly revised 0.5% increase. The monthly average increase in overall average hourly earnings this year has been 0.3% versus, down from 0.4% per month last year.

Phillips Curve Instability and Optimal Monetary Policy from the Federal Reserve Bank Of Kansas City is available here.

Employment July June Y/Y 2006 2005 2004
Payroll Employment 92,000 126,000 1.4% 1.9% 1.7% 1.1%
  Manufacturing -2,000 -13,000 -1.2% -0.2% -0.6% -1.3%
Average Weekly Hours 33.8 33.9 33.9 (July '06) 33.8 33.8 33.7
Average Hourly Earnings 0.3% 0.4% 3.9% 3.9% 2.8% 2.1%
Unemployment Rate 4.6% 4.5% 4.8% (July '06) 4.6% 5.1% 5.5%
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