Unemployment Rate Ticks Up to 8.3% — But There’s Good News, Too

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The unemployment rate rose to 8.3% in July, but it’s probably the most hopeful jobs report in months.

On Friday the Labor Department reported that 163,000 jobs were created in July, a figure that surprised most economists and outran almost all projections. The unemployment rate rose to 8.3%, but the report included a number of encouraging signs.

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First, anytime monthly jobs figures are in the six digits these days, it feels like a reason to rejoice. After what appeared to be the beginning of a recovery earlier this year (much like in 2011), the last several months have seen gains below 100,000, not enough to significantly move the unemployment rate one way or another, or even keep up with population growth. May payroll numbers were revised upward from 77,000 to 87,000 in the July report, while June was revised downward from 80,000 to 64,000. Dismal numbers indeed.

The July jobs gain itself was the strongest in five months and beat out most economists’ projections of around 100,000.

While government is still shedding jobs, everybody else is hiring. The manufacturing sector added 25,000 jobs, the health-care industry added 12,000, and professional and business services gained 49,000, putting private sector payroll gains at a relatively healthy 172,000. Government positions fell 9,000.

Friday’s numbers show a discrepancy between the unemployment rate and the jobs figures, and that’s because the rate measures the number of people looking for a job. Last month there were 260,000 fewer “discouraged workers,” meaning  more people attempted to re-enter the labor force by looking for work.

“That’s a big swing,” says Peter Cappelli, professor of management at the University of Pennsylvania’s Wharton School. “It’s a huge number, and that’s good news.”

Another good sign: The number of long-term unemployed dropped by 185,000 between June and July when seasonally adjusted. But it’s still higher than it was just a few months ago and is now at 5,185,000 Americans who have been out of work for 27 weeks or more.

The worrisome news is that the economy is only averaging about 151,000 job gains a month since the beginning of the year, which is basically the same number of average gains in 2011 (153,000). Just to keep up with population growth the economy needs to create about 140,000 jobs a month, Cappelli says, and that’s something that hasn’t been sustainable since the recession hit in 2008-09.

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The mixed bag of numbers could give the Federal Reserve another reason to further stimulate the economy, perhaps with another round of quantitative easing. But the Fed isn’t likely to take any action before its policymakers meet in mid-September. The markets were up sharply Friday morning, partly because of the semi-positive jobs news, but also because of the perception that the numbers were not strong enough to dissuade the Fed from further monetary stimulus.

In Washington, the discrepancy in the employment rate and the raw jobs numbers will certainly give both the White House and Republican presidential challenger Mitt Romney fodder for attack. Romney will likely point to the uptick in unemployment as a sign that the economy is heading in the wrong direction, while President Obama will laud the unexpectedly strong payroll numbers.

While there are clearly still troubling signs for the economy in the report, overall it could have been much worse.

“The big story is more the trend than the level,” says Cappelli, comparing July to the previous two months. “Things were headed in the other direction. This is a big move from where we were in June, and it’s across the board.”

17 comments
MaryWaterton
MaryWaterton

The real unemployment is easily double the 8.3% and anyone with eyes knows it. What kind of country do we have when lies are never challenged?

Firozali A.Mulla
Firozali A.Mulla

(These are the leaders of today)  The European Central Bank has broken new ground in the eurozone crisis with hints that it could start unlimited buying of stricken member states' bonds to drive down their crippling borrowing costs. After initial disappointment at ECB head Mario Draghi's failure to take immediate action to help ailing countries at a meeting Thursday, many analysts were more encouraged after giving his remarks a second reading. Draghi said the central bank could intervene directly in the bond markets under a programme known as SMP to help countries left high and dry in the crisis but this depended on governments holding up their end of the bargain. He also said the ECB might consider additional measures to calm markets which have driven borrowing costs for Italy and Spain back near to levels that forced Greece, Ireland and Portugal to seek massive bailouts. Under the SMP programme launched in May 2010 and suspended four months ago, the ECB had said its purchase of sovereign bonds was limited in both time and amount. Christian Schulz of Berenberg bank said the ECB had "finally stepped up to the plate meaningfully" which could help head off further trouble. "If the ECB convinces markets that it is providing a reliable safety net for solvent sovereigns which stay on the reform path, it may lure more investors back into these markets," he said. "In that case, the ECB may not have to buy many bonds." Draghi's comments Thursday disappointed markets expecting immediate action but on Friday, it was the complete reverse with Madrid and Milan soaring by 6.0 percent and more -- albeit helped too by better-than-expected US jobs data. It may be only a matter of time before the financial crisis in Europe rocks the rest of the world, including the United States.So far, European leaders haven't been able to come up with an answer to turn things around.Euro TragedyIn Athens, Greece, a homeless shelter is now caring for people who used to belong to the middle class. In Terrassa, Spain, desperate homeowners facing foreclosure are banding together in hopes of somehow not joining the homeless.You can see the fear on their faces. It is the same story all across the troubled economies in the eurozone. While European Union leaders keep announcing their next great solution to the eurozone debt crisis, nothing has worked. And many economists predict nothing will work. Meanwhile, the economies are continuing the crumble. If it were just Spain that needed a bailout, there might be some hope of saving the euro. But it's also Greece and Italy and perhaps even France. And there is not enough money or political will to bailout all of them."The euro as it is now will not survive," German economist Philipp Bagus, author of The Tragedy of the Euro"The problem is too high debt, too high deficits. The states are just too big," he explained. "This self-destructive mechanism could have been prevented."But Europe remains addicted to the problem: a flawed currency, enormous welfare states, and deficit spending.In Athens, economist Elena Paranitis said Greece's real problem is not a fiscal crisis but a productivity crisis because of heavy government regulations and the welfare state.

"It's impossible to do business in Greece. It's impossible to be a good entrepreneur in Greece," she said.Support for radical parties is growing in Greece. Paranitis said if going back to the old Greek currency, the drachma, is the solution, the medicine could kill the patient."You will have a natural shock of inflation that will create a higher level of stress than this country can take anymore," she predicted.Critics say the recent and highly touted European Union summit to tackle the eurozone crisis already stands as yet another failure.Investors have once again pushed Spain's borrowing costs through the roof. Respected economist Nouriel Roubini said in three to six months, Italy and Spain will no longer be able to borrow money at all. And France could find itself in financial trouble as well. Some analysts wonder if the new French socialist government has gone insane -- chasing business owners from the country by raising taxes on the wealthy and bloating the deficit even further by raising the retirement age.Meanwhile, E.U. leaders still seem unwilling or unable to do what it takes to stop a crisis that is slowly but inevitably spinning out of control. I thank you Firozali A.Mulla DBA

Jeankr
Jeankr

One would think that our politicians would not want all these people coming to the U.S. - both legally and illegally. 

Don't they want jobs for Americans???

Why are they letting foreigners take the few jobs that we have??

Douglas4517
Douglas4517

Yes, the good news in this is that it looks bad for Obama.

Terry
Terry

Notice that the June jobs were revised downward from the original figure announced.  Does anyone really believe that July figure?  It will also be quietly revised downward next month.  These are fake numbers.  Why should we believe them when they are almost always revised downward the following month after they are announced.

bcfred
bcfred

That's my concern - estimates have been revised downward pretty much every month this year, sometimes dramatically.  But that's sand on the beach - sources I read estimate we need to be adding anywhere from 350,000 per month to get us back to long-term average GDP growth to more than 500,000 per month to match the typical post-recession recovery.  To celebrate at all over 185,000 shows how diminished our expectations have become.

brianleesblog
brianleesblog

This does not report that U.S. immigration policy is responsible for more than three-quarters of that population growth. Part of that policy is granting an average 75,000 permanent work permits to foreign workers every month.

bhayzone
bhayzone

Well, idiot, throwing out dumb numbers without any verifiable sources.

ANNUALLY the US grants 140000 permanent resident permits (employment)

ANNUALLY the US grants 65000 work visas to immigrants (employment)

Combined, they account for just a shy over 0.1% of the entire workforce.

The immigration slogan is a nice n easy way of getting popular, but unfortunately it does not achieve much for the people.

don54221
don54221

I don't see any verification of your numbers-just dumb numbers-

 should we consider you an idiot also ?

With high unemployment for the last several years it make no sense to have any immigration

bhayzone
bhayzone

What you think doesn't mean a thing to me. Though if you prefer to accept some stupid numbers without even taking a minute to consider whether they make sense (even wildly) and instead attack facts (or at least numbers that sound logical), then I don't know what to think of you.

The other post was stupid not for the lack of credible sources, but for the illogical numbers posted.

I did not post any sources coz I think that if you are really interested, the least you would do is do a small search on google to find the facts. Anyways, i'll save you the trouble and I hope you will take at least a few seconds to read and understand the facts.

http://www.uscis.gov/portal/si...

"The U.S. Department of State is the agency that distributes visa

numbers. Family sponsored preference categories are limited to 226,000

per year and employment based preference visa are limited to 140,000 per

year.  In addition, there are limits to the percentage of visas that

can be allotted to each country."

RoccoJohnson
RoccoJohnson

Why is it people like you always have to resort to personal attacks to make your point? Does it make you feel better about yourself to call someone else an idiot?

bhayzone
bhayzone

It's not about whether I agree to the numbers or not, its about how stupid the numbers posted are, and how dump people must be to believe in those number without even taking a second to think it in their mind.

All along, you have been more interested in defending the previous post rather than in knowing facts. If you really wanted to know, the information is very easy to find - its public information after all.

http://www.uscis.gov/portal/si...

"The U.S. Department of State is the agency that distributes visa

numbers. Family sponsored preference categories are limited to 226,000

per year and employment based preference visa are limited to 140,000 per

year.  In addition, there are limits to the percentage of visas that

can be allotted to each country."

RoccoJohnson
RoccoJohnson

bhayzone, 

whether or not you agree with the figures quoted in brianleesblog’s comment, if the best you can offer in return is to call him an idiot and provide unsubstantiated numbers of your own, you do little to bolster your claim that he is wrong, and certainly add nothing to prove your intellectual superiority.

bhayzone
bhayzone

Why is it that people like you don't recognize the idiotic nature and vile intention of someone's post? Is it because it's immigration related and somewhere deep inside you feel the same too?

Anyways, I called him an idiot because the figures he/she posted were hilarious. If the US were to grant that many work permits in a month, most of us would have been out of work long ago and the US would be competing with India/China in population growth.

vstillwell
vstillwell

Well, if this is good news, I would hate to hear the bad news. Our society is being torn apart at the seams. There are few opportunities out there. Big biz continues its buying spree in Washington. Nobody seems to care. 

At a time when the real unemployment rate is around 15 percent and corps are more profitable than ever, I think we need to step back and see if this economy--in the way it's constituted now--supports Democracy in this country anymore. This is the United States of America. It's not the United Global Corporation of the World.

John Chay
John Chay

Bad news?  We were losing 800,000 jobs a month at the end of Bush's term.  That is bad news.

vstillwell
vstillwell

You're right, but it's 2012 and Washington doesn't give a flip about the economy. Look, this economy doesn't work for most people. It works for some, but not all. If you're in a government subsidized industry like energy, healthcare, defense or agriculture, times are good. If you're a private sector person, times aren't so good.