Economy Generates 163,000 Jobs in July; Unemployment
Edges Up to 8.3 Percent

August 3, 2012 (Jobs Byte)

By Dean Baker
http://www.cepr.net/index.php/data-bytes/jobs-bytes/economy-generates-163000-jobs-in-july-unemployment-edges-up-to-83-percent

Job growth should average 160,000-180,000 the rest of
the year.

The economy added 163,000 jobs in July, its fastest rate
of job growth since February. While this number was
somewhat higher than consensus predictions, it is
consistent with the decline in weekly unemployment
claims in recent weeks to levels that are near the low-
point for the recovery. The unemployment rate edged up
to 8.3 percent.

Manufacturing again played a leading role in job gains,
adding 25,000 jobs in July, slightly above its 19,000
monthly average over the last year. This number was
inflated somewhat by a 12,800 gain reported in auto
manufacturing, since this likely reflects changes in the
timing of retooling shutdowns.

Retail and construction employment were both close to
flat. Given recent data in both sectors, it is likely
that job growth will be somewhat better in the months
ahead. Health care added just 12,000 jobs in July after
adding 11,300 in June, well below the average of 25,000
for the last year. If this slowdown continues, it might
mean slower cost growth in health care, but it also
means that a major source of job growth in the recovery
has been weakened.

Educational services added 18,200 jobs in July, which
reversed the loss of 15,200 reported in June. Clearly
this is a seasonal issue. Restaurants added 29,400 jobs,
a bit more than the 24,000 average over the last year.
The broad temporary help sector added 21,800 jobs on top
of the 22,200 jobs added in June. This is good, but not
spectacular growth from a sector that is viewed as a
harbinger of future job growth.

The government sector lost 9,000 jobs in July, the same
as in June. It appears that job loss in the sector is
finally slowing.

Women accounted for more than half (86,000) of the jobs
created in July, but we continue to see unusual
patterns. For example, jobs held by women in retail fell
by 3,100, while jobs held by men went up by 9,800. The
average hourly wage has increased at a 2.0 percent
annual rate over the last quarter, slightly above the
1.7 percent rate for the last year.

The household data were mixed, but showed a somewhat
weaker picture than the establishment survey.
Corresponding to the slight rise in the unemployment
rate, the employment-to-population ratio (EPOP) fell to
58.4 percent, just 0.2 percentage points above the low
for the downturn hit last summer. The EPOP for white
women fell to 54.6 percent, a new low for the downturn.

However, not all the data in the household survey were
bad. The EPOP for black teens rose to 18.5 percent, the
highest level since January 2009. This number is highly
erratic, but it is still a positive sign.

In addition, all of the unemployment duration measures
fell sharply. The average duration of unemployment
spells fell by 1.1 weeks to 38.8 weeks, while the median
fell by 3.1 weeks to 16.7 weeks, the shortest duration
since August of 2009. The share of long-term unemployed
fell to 40.7 percent, the lowest since December of 2009.
Also the number of discouraged workers fell sharply from
its year-ago level.

On the negative side, the survey showed a continuing
rise in the number of involuntary part-time workers to a
level 527,000 above the March level. And the share of
the unemployed who voluntarily quit their jobs continued
a downward trend from March.

The main news in this report is a marked upswing in the
rate of payroll job growth. The 163,000 rate shown in
this report is likely too close to the economy’s
underlying growth rate at this point. Many analysts
became overly optimistic as a result of the weather-
boosted jobs gains last winter. They then became overly
pessimistic as a result of the payback in the spring as
employment growth that would ordinarily take place in
these months had already occurred.

With construction getting stronger and retail sales
likely improving in the fall, it is reasonable to expect
job growth in the range of 160,000-180,000 over the rest
of the year. This is better than the last few months,
but it will take a decade at this pace to make up the
jobs deficit.

CEPR's Jobs Byte is published each month upon release of
the Bureau of Labor Statistics' employment report.
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