In July 2010, the US unemployment rate remained unchanged at 9.5%. This was slightly better than market expectations for the rate to rise to 9.6%. The US unemployment rate had moved up from a low of 4.4% in March 2007, to a peak of 10.1% in October 2009. Since October 2009 the rate of unemployment has generally eased, mainly because the labour market participation rate has declined. In July 2010 the labour market participation rate fell fractionally to 64.6% from 64.7% in June 2010.
During the month non-farm payrolls fell by 131 000, which was worse than market expectations for a decline of 70 000. The May and June 2010 data was revised down by a total of 97 000, which is a fairly substantial revision. The main reason for the reduction in employment in July 2010 was a 143 000 decline in the number of temporary employees working on Census 2010. The private sector gained 71 000 jobs in July 2010, which was less than expected (market expected a gain of 100 000). In the first seven months of 2010 the US private sector has added 630 000 jobs, which is a relatively modest gain given the stage of the economic recovery, but a vast improvement on the 4 million jobs lost during the same time in 2009.
Since December 2007 (when the US recession officially started), payroll employment has fallen by a net total of 7.7 million, or 5.6%.
During the month of July 2010:
- Manufacturing employment increased by 36 000. Motor vehicles and parts had fewer seasonal layoffs than normal, contributing to a seasonally adjusted employment increase of 21 000. Employment in fabricated metals rose by 9 000. Manufacturing employment has expanded by 183 000 since December 2009.
- The industry had added 32,000 jobs in the first 6 months of the year.
- Health care added 27 000 jobs. Over the past 12 months, health care employment has risen by 231 000.
- Employment in transportation and warehousing edged up by 12 000. Since a recent low in February 2010, transportation and warehousing has added 56 000 jobs.
- Mining employment rose by 7 000, with the gain concentrated in support activities for mining. Mining has added 63 000 jobs since October 2009.
- Employment in professional and business services was slightly changed (-13 000). The number of jobs in temporary help services showed slight movement (-6 000).
- Employment in financial activities continued to trend down, with a decline of 17 000. So far this year, monthly job losses in the industry have averaged 12 000, compared with an average monthly job loss of 29 000 for all of 2009.
- Construction employment changed slightly (-11 000); 10 000 construction workers were off payrolls due to strike activity.
- Employment in other private-sector industries, including wholesale trade, retail trade, information, and leisure and hospitality showed little change.
- Government employment fell by 202 000, largely reflecting the loss of 143 000 temporary workers hired for Census 2010. Employment in both state and local governments edged down.
Changes in government employment, relating to the Census, continue to distort the overall employment data. However, the underlying trend (gains in private sector employment) remains relatively disappointing. There is no clear upward momentum in private sector employment, which is disappointing given the stage of the economic recovery. For example, by this stage, in both the 1981/1983 recession and the 1990/1993 recession, employment was already back to pre-recession levels.
The job market is likely to take a number of years to fully recover, especially when one considers that the previous two employment booms in the US were driven by very specific industry dynamics, namely the growth in the hi-tech sector (1994 to 2000), which ultimately led to a bubble in technology stocks, and the growth in the housing market (2003 to 2007), which ultimately led to a structural oversupply of housing and the credit crisis.
The lack of vibrancy in employment growth implies a below trend recovery in the US, but not necessarily a double-dip recession. However, should private sector employment start to decline, that would signal a return to recession conditions.
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