The U.S. economy lost "only" 247,000 jobs in July, the Labor Department announced Friday, with the nation's unemployment dipping to 9.4 percent -- a certain sign of progress in the nation's long journey back to economic health. Further, the job loss total was considerably less than expected for the third straight month, providing more evidence that lay-offs may have peaked and the recession in the world's largest economy is bottoming.
Further, it was the lowest monthly job loss total in 11 months. A Bloomberg News economists survey had forecast the job market would shed 300,000 more jobs in July and the unemployment rate would rise to 9.7 percent. The economy lost a revised 442,000 jobs in June and 322,000 jobs in May.
However, nearly every sector shed jobs. Manufacturing lost 52,000 jobs, construction saw 76,000 jobs pared, services lost 119,000 jobs, retail lost 44,000 jobs, and transportation shed 22,000 jobs. The two bright spots, as has been the case for several months, were health care, which added 20,000 jobs, and government, which added 7,000 jobs.
What's more, the nation's economy has now shed roughly 6.8 million jobs since the recession started in December 2007. However the lower, recent job loss trend is clear: payrolls have dropped an average of 331,000 in the past three months, compared to an average of 645,000 for the six months previous to the last three.
Also in June, nearly 5 million people had been out of work for more than six months. Meanwhile, average hourly earnings rose by 3 cents, or 0.2 percent, to $18.56.
Job market turning around?
Economist Robert G. Langen told DailyFinance Friday the July jobs report does not indicate that the labor market has turned around, but the major cuts appear to be over. "The major job loss announcements are behind us," Langen said. "That said, we still need to create demand to convince companies that economic fundamentals are strong enough to expand their payrolls. The July data is another step in the right direction, but we're a long way from actual job growth."
Further, an alternate unemployment gauge, which includes workers who can find only part-time work and discouraged workers, fell to 16.3 percent in July from 16.7 percent in June.
Many applicants per position
Moreover, the nation's deepest recession in more than 25 years has created a troubling job market, according to the Economic Policy Institute, a liberal think tank based in Washington, D.C. As of June, there were nearly 6 qualified employees for every job opening in the United States, the EPI said, and more than 25 million Americans are now lacking the work they want.
Is the worst of the recession, from a job-loss standpoint, finally behind the nation? The July data continues a downward trend, but many economists say several more months of steadily-lower monthly job losses will be needed to confirm the trend. More than once the U.S. economy has registered a double-dip recession -- where job losses fall, only to rise again. What's more, the U.S. recovery could be weak, where GDP grows, but payrolls do not increase by a large enough amount to decrease unemployment -- a "growth recession."
Moreover, the latter remains a risk, given the U.S. economy's restructuring. The United States must identify and create new, value-added growth engines -- in health care services, information technology, infrastructure, education, renewable energy, tech-based manufacturing, and biotech -- to make up for the industrial output and jobs lost to globalization. Those new sectors must appear for the United States to remain a strong, versatile, and prosperous nation with ample economic opportunities, and sustainable GDP growth.
Another way of looking at the above task is to determine how long it will take the nation to return to full employment -- basically an economy in which everyone who wants to work can find a full-time job to match their skill set and experience. It's no minor task: the U.S. economy has to create about 200,000 jobs per month -- a roughly net 100,000 job gain over the monthly gain needed to keep unemployment from rising -- for the next 5.5 years to replace the roughly 6.8 million jobs lost during the recession.
Economic Analysis: Job losses are trending lower, but investors should keep in mind that the economy is nevertheless still losing jobs: that has to reverse, with sustained, monthly job gains of more than 150,000 before one can think in terms of a healthy U.S. economy.