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Economy in Brief

U.S. Nonfarm Payrolls Decline As Census-Taking Ends; Private-Sector Hiring Is Again Modest
by Tom Moeller August 06,2010

The job market continued soft last month. Nonfarm payrolls declined 131,000 as 143,000 Census takers were let go. The drop was greater than Consensus expectations and followed a downwardly-revised 221,000 June decline; the May increase of 432,000 was little-changed. Hiring in the private sector continued modest. A weak gain of 71,000 was the strongest of the last three months but it left payrolls little-changed versus last year. So far this year private sector payrolls have risen 0.6% following last year's record 5.2% decline.

Amongst sectors, hiring gains were modest, if positive. Factory sector payrolls rose 36,000 and they're up 1.6% YTD. Private service producing payrolls rose 38,000, 0.6% YTD, but construction jobs fell 11,000, down 2.2% YTD. Amongst industries, 55.6% added to July payrolls and 55.4% increased them during the last three months. Both figures are down from their April peaks. Temporary employment fell by 5,600, the first decline since September. Following November's peak, monthly gains decelerated sharply.

Overall, individuals worked a slightly increased average 34.2 hour workweek, up from last year's monthly low of 33.7 weeks. The 40.1 hour factory sector workweek was the longest compared to a 33.1 hour week in the service sector. Aggregate hours worked (employment times hours) started the third quarter 0.3% above 2Q.

As was the case last month, these disappointments did not keep the unemployment rate from remaining at 9.5%. This was the lowest level since July and contrasted with expectations for an uptick to 9.6%. However, the decline occurred as another 181,000 individuals (-0.5% y/y) left the labor force, the third consecutive sharp decline. The labor force participation rate dropped to 64.6%, the lowest since 1985. Nearly six million individuals have dropped out of the labor force but want a job now. Household employment fell 159,000 (-0.6% y/y) after a 301,000 June decline. Labor-market underutilization was further evident in the 16.5% of workers who were either unemployed, "marginally" attached or involuntarily employed part-time. Even further slack was evident in the average duration of unemployment which fell slightly from the postwar record to 34.2 weeks; 44.9% had been unemployed for 27 weeks or more.

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

Employment: 000s July June May Y/Y 2009 2008 2007
Payroll Employment -131 -221 432 -0.0% -4.3% -0.6% 1.1%
    Previous -- -125 433 -- -- -- --
  Manufacturing 36 13 39 -0.2% -11.3% -3.4% -2.0%
  Construction -11 -21 -29 -6.3% -15.7% -6.1% -0.8%
  Private Service Producing 38 34 30 0.3% -3.4% -0.2% 1.7%
  Government -202 -252 381 -0.0% 0.2% 1.3% 1.1%
Average Weekly Hours 34.2 34.1 34.2 33.8(July '09) 33.1 33.6 33.8
Average Hourly Earnings 0.2% 0.0% 0.2% 1.8% 2.7% 3.1% 3.2%
Unemployment Rate 9.5 9.5 9.7% 9.4%(July '09) 9.3% 5.8% 4.6%
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