The Employment Situation in July
Today’s employment report shows that private sector payrolls increased by 154,000 in July and the unemployment rate ticked down to 9.1 percent. The economy has added 2.4 million private sector jobs over the past 17 months, despite a slowdown in economic growth from substantial headwinds in the first half of the year.
While the better than expected report is welcome news, the unemployment rate remains unacceptably high and faster growth is needed to replace the jobs lost in the downturn. Bipartisan action is needed to help the private sector and the economy grow – such as measures to extend both the payroll tax cut and unemployment insurance, as well as passing the pending free trade agreements with re-employment assistance for displaced workers, the patent reform bill, and a bipartisan infrastructure bill to help put Americans back to work. This week we averted an economic catastrophe by avoiding a default and putting in place an important down payment on long term deficit reduction. We will continue to work with Congress to build on these efforts to achieve a broader balanced deficit reduction agreement that instills confidence and allows us to live within our means without shortchanging future growth.
In addition to the increases last month, payroll survey estimates of private sector job growth for May (now +99,000) and June (now +80,000) were revised up. Overall payroll employment rose by 117,000 in July. The growth was broad based. Sectors with employment increases included professional and business services (+34,000), health care (+31,300), retail trade (+25,900), manufacturing (+24,000), leisure and hospitality (+17,000), and construction (+8,000). Sectors with employment declines included government (-37,000) and financial activities (-4,000). Manufacturing has added 289,000 jobs since the beginning of 2010, the best period of manufacturing job growth in over a decade. Meanwhile, state and local governments lost 39,000 jobs in July and have shed more than 400,000 jobs since the start of 2010.
The monthly employment and unemployment numbers are volatile and employment estimates are subject to substantial revision. Therefore, as the Administration always stresses, it is important not to read too much into any one monthly report.
Austan Goolsbee is Chairman of the Council of Economic Advisers