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August 5, 2011

Fundamentals 8/5: Jobs Report Summary

August 5, 2011

Fundamentals 8/5: Jobs Report Summary

BLS Jobs Report
The July jobs report shows 117,000 more payrolls in July.  Normally this would be regarded as mediocre but at present this is above expectations.  That says as much about expectation as it does about jobs.

Private jobs gained 154,000. The large gains were in health care (36,700) and Retail (25,900).  Manufacturing gained 24,000.

Average Weekly Hours were flat at 33.6 and Average Hourly Earnings were up 8 cents to $19.52.

The Civilian Labor Force shrunk by 193,000.  The Unemployment Rates fell to 9.1% while the labor participation rate fell by 0.2%.  These last bits of data show that we should be paying attention to the Labor Participation Rate rather than the Unemployment Rate. It is an increase in the Labor Participation Rate which will grow the economy.  Thinking that things are good because people left the labor force and the unemployment rate fell makes no sense.

The fact that anyone thinks that this report is a sign of economic strength indicate just how weak the economy is.  This is not about a double-dip recession.  This is about the fact that we may have already entered a prolonged (greater than 10 years) period of very low GDP growth.  We are by no means past the point where the effects of the liquidity crisis have ended.