U.S. unemployment rate takes one step forward, two steps back
The latest jobs report detailing the U.S. unemployment rate for July reflects the ongoing battle between the bad news and the good news. The unemployment rate held steady at 9.5 percent. But the U.S. economy had more job loss than economists expected. The U.S. economy added 71,000 jobs in July, but lost 131,000. Manufacturing added 36,000 jobs, but those gains are the lowest of the year as orders and production decline. Average hourly earnings increased, average hours worked rose and productivity increased. But increasing productivity is another factor holding back hiring.
U.S. unemployment rate stuck in limbo
Companies in the U.S. added workers in July for a seventh straight month. However, The Wall Street Journal reports that taking into account revisions to prior months this year, the U.S. economy added an average of less than 100,000 jobs a month in the first seven months, a level that’s not strong enough to offset the job loss that would bring unemployment down. Jobs report data for June was also revised downward. Jobs fell 221,000 that month, more than the 125,000 job loss previously reported. Only 31,000 jobs were added to the private sector in June. The 131,000 job loss in July far exceeded the 60,000 economists polled by Dow Jones Newswires were expecting.
U.S. economy: work is good if you got it
July’s jobs report did contain a few bright spots. Daily Finance reports that the average workweek increased by 0.1 hour to 34.2 hours. Average hourly earnings increased 4 cents to $22.59 per hour. U.S. productivity continues to increase at a robust rate — 3 percent in the last 12 months and 4 percent in the first quarter of 2010. Higher U.S. productivity is boosting corporate earnings. Companies are sitting on huge piles of cash. High productivity and more efficient business models are good for stock prices, but that means many companies don’t feel they have to hire more workers.
Fed ponders what to do about unemployment
The jobs report could determine what the Federal Reserve does next to influence the unemployment rate. Bloomberg reports that options outlined by Fed chairman Ben Bernanke last month include further reducing the 0.25 percent rate the Fed pays on banks’ reserve deposits. Expanding the amount of assets on the Fed’s near-record $2.3 trillion balance sheet — a broad gauge of Fed lending to the financial system to hold down borrowing costs, is also an option.
Americans at odds with themselves about unemployment
Meanwhile, much like the good news/bad news in the jobs report, the conflicting opinions of the public cancel each other out. More than seven in 10 Americans say the U.S. economy is still mired in recession, according to a Bloomberg National Poll. Seven of 10 Americans also said reducing unemployment is the government’s top priority. But more than half are skeptical of the stimulus program and wary of more spending.