July payrolls down 131,000
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Implications:  If you're an unemployed worker (or working "under the table") and looking for a formal job, today's report was a disappointment, with payrolls growing less than the consensus expected in the private sector and shrinking more than expected in the government sector.  However, for those who are already employed, today's report was strong.  Again, not mediocre, actually strong.  Goods-producing industries have pushed their workweek back to pre-recession levels – meaning further production gains will translate into more employment.  Meanwhile, average hourly earnings increased 0.2%.  We can use data on total hours and hourly earnings to figure out total earnings, which increased at a 6.2% annual rate in July and are up at a 4.1% annual rate in the past nine months.  This is more than enough for workers to both increase consumption and, if they want, increase their saving.  Although the size of the labor force (workers and those who say they're looking for work) remains stagnant, at levels first reached in early 2008, this may be related to a drop in the number of illegal immigrants, many of whom worked in residential construction, one of the sectors hit the hardest in the recession.  So far this year, private payrolls are up 90,000 per month while civilian employment – minus the government sector – is up 200,000 per month. 

In other recent news, new claims for unemployment insurance increased 19,000 last week to 479,000.  Continuing claims for regular state benefits rose 49,000 to 4.59 million.  Claims data should become much less volatile in August, as seasonal adjustments for annual auto layoffs are left behind.

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Posted on Friday, August 6, 2010 @ 9:49 AM

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