- Overall, this is a surprisingly good report even though the unemployment rate went up from 8.2% to 8.3%. The unemployment rate increased mainly because 153,000 previously unemployed workers reentered the labor market in search of work. This is a much-needed sign of optimism.
- The private sector created a surprisingly large number of new jobs in July, 172,000. The government subtracted 9000 jobs, for a net increase of 163,000. The average monthly increase in jobs this year has been 151,000, so the current monthly gain exceeded the yearly average.
- Although the number of jobs created was lower than the amount needed to reduce high unemployment, it is still the highest it has been since the first quarter.
- Black and Latino unemployment decreased during the month of July.
- In general, the labor market is surprisingly strong given the continuing debt crisis in Europe and the fact that the U.S. Congress will not likely address the deficit issue or the fiscal cliff until after the November election.
- The Federal Reserve does not need to intervene by undertaking additional quantitative easing.
Labor Market Details
The Labor Department’s latest jobs report shows that for the month of July the unemployment rate increased slightly from 8.2% to 8.3%. The increase was in line with expectations.
More importantly, the increase was mainly created by 153,000 previously unemployed workers reentering the labor market in search of work, which is an encouraging sign.
The number of jobs created, 163,000 was more than doubled the number that was created in June (64,000). The private sector created 172,000 jobs, but government cutbacks reduce that a number by 9000.
The large number of new jobs surprised analysts, who were expecting 100,000 to 125,000 new jobs.
Jobs were created in professional business services (49,000), education and health services (38,000), leisure and hospitality (27,000) and manufacturing (25,000). Manufacturing jobs continued their steady increase over the last several months.
Among ethnic and racial groups, white unemployment remained the same at 7.4%, unemployment among blacks decreased from 14.4% to 14.1%. Also, unemployment among Latinos decreased from 11% to 10.3%.
Other Noticeable Trends
Unemployment among persons with some college or a college degree has declined more rapidly than has overall unemployment. It currently stands at 7.1% (down from 7.5% in June).
Unemployment among persons with only a high school degree increased from 8.4% to 8.7%.
Long-term unemployment (27 weeks or longer) continues to decline. It was 6.2 million a year ago and is currently 5.2 million.
Last modified: June 20, 2017