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Economy in Brief

U.S. Payrolls Rise 209,000; Jobless Rate Backs Up
by Tom Moeller  August 1, 2014

The rate of job market improvement toned down a bit last month. Nonfarm payrolls increased 209,000 during July following upwardly-revised gains of 298,000 and 229,000 during the prior two months. The increase fell short of  expectations for a 230,000 rise in the Action Economics Forecast Survey. The unemployment rate notched higher to 6.2% versus an expected 6.1%. The overall unemployment rate, including marginally attached workers and those employed part-time for economic reasons, rose to 12.2% from 12.1%.

From the payroll survey, jobs increased 209,000 following upwardly revised gains of 298,000 and 229,000 in June and May. The three-month average rise in nonfarm payrolls of 245,000 was below its recent peak of 277,000 logged last month. Factory sector payrolls increased 28,000 lifting the average three-month rise to 22,000, the firmest increase since May 2012. Construction jobs grew an improved 22,000. The three-month increase, however, slowed to 14,000, half the 29,000 averaged this winter. Private service producing employment growth also eased to 140,000, the weakest gain since January. It lessened the three-month rise to 191,000 which roughly matched the low in April. Most industry groupings saw slower job growth. Professional & business services jobs grew 47,000 (3.5% y/y) compared to a 59,000 three-month gain. Trade, transportation & utilities jobs advanced 39,000 (2.2% y/y) versus a three-month average of 48,000. Jobs in retail trade rose 26,700 (2.0% y/y) compared to a three month average of 26,600. Leisure & hospitality employment improved 21,000 (2.6% y/y) versus a three-month average of 30,000. In the education sector, employment rose 17,000 (1.8% y/y) which was less-than half the average three-month rise. Financial activities jobs gained 7,000 (0.6% y/y) compared to a three-month average of 11,000. In the public sector, jobs grew 11,000 (0.4% y/y) and the average three-month rise was 13,000. The slowdown in job creation at the local government level was minimal. Jobs rose 12,000 (0.7% y/y) compared to a 13,000 three-month average. Federal government jobs were unchanged (-1.5% y/y) versus no change averaged during the last three months. State government jobs slipped 1,000 (+0.8% y/y) versus no change averaged since May.

The length of the average private sector workweek held steady at 34.5 hours for the fifth straight week. The construction sector workweek moved to a new high of 39.5 hours but the factory sector workweek dipped to 40.9 hours. The private service sector workweek held steady at 33.3 hours.

Average hourly earnings were unchanged last month following two months of 0.2% increase. Earnings in the information industry gained 4.1% y/y while leisure & hospitality earnings advanced 2.7% y/y. Professional & business services earnings increased 2.5% y/y. Earnings in the factory sector were up 2.2% y/y while financial activities earnings rose 1.7% y/y. The gain in education & health earnings lagged with a 0.9% increase.

From the household employment survey, the unemployment rate ticked up m/m to 6.2% but still was nearly the lowest level since September 2008. Employment grew 131,000 (1.4% y/y) but that lagged the 329,000 rise in the labor force (0.2% y/y). As the noninstitutional population grew 0.9% y/y, the labor force participation rate ticked higher to 62.9%. Nevertheless, it remained nearly the lowest since 1977. The ranks of those potential workers not in the labor force grew 2.2% y/y but that was down from 3.2% growth in last year's fourth quarter. Of those unemployed, 20.7% were out of work for 52 weeks or more, down from 31.0% at the end of 2010.

The figures referenced above are available in Haver's USECON database. Additional detail can be found in the LABOR and in the EMPL databases. The expectation figures are from Action Economics and are in the AS1REPNA database.

The Minimalist Picture from the Federal Reserve Bank of Minneapolis is available here.

Employment: (M/M Chg., 000s) Jul Jun May Y/Y 2013 2012 2011
Payroll Employment 209 298 229 1.9% 1.7% 1.7% 1.2%
 Previous -- 288 224 -- -- -- --
 Manufacturing 28 23 15 1.5 0.7 1.7 1.7
 Construction 22 10 9 3.6 3.3 2.1 0.2
 Private Service Producing 140 232 202 2.1 2.2 2.2 1.9
 Government 11 28 1 0.4 -0.3 -0.8 -1.8
Average Weekly Hours - Private Sector 34.5 34.5 34.5 34.4
34.5 34.4 34.3
Average Private Sector Hourly Earnings (%) 0.0 0.2 0.2 2.0 2.1 1.9 2.0
Unemployment Rate (%) 6.2 6.1 6.3 7.3
7.4 8.1 8.9
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