The
U.S. Bureau of Labor Statistics reported today that total nonfarm payroll
employment increased by 162,000 in July, and the unemployment rate edged down
to 7.4 percent. While the unemployment figures fell more than economists expected, forecasts called for a gain of
180,000 jobs in July, according to a survey by CNNMoney.
Employment
rose in retail trade, food services and drinking places, financial activities,
and wholesale trade.
The
market reaction to the news was immediate with stock futures trending downward
and bond yields falling. The yield on the 10-year
Treasury note dropped to 2.61% from
about 2.74% before the report. The Federal
Reserve has said that improvement in the job market could be a trigger for the
central bank to begin removing the liquidity it has been pumping into the
market.
With
lower unemployment figures, there is some concern that the Fed’s bond-buying
program could start to be curtailed as early as September. The Fed has said that improvement in job market data
will be a trigger for the central bank to begin removing the liquidity it has
been pumping into the market. The target to cease the program has been
an unemployment rate of 7.0%.
Household
Survey Data
Both
the number of unemployed persons, at 11.5 million, and the unemployment rate,
at 7.4 percent, edged down in July. Over the year, these measures were down by
1.2 million and 0.8 percentage point, respectively.
In
July, the number of long-term unemployed (those jobless for 27 weeks or more)
was little changed at 4.2 million. These individuals accounted for 37.0 percent
of the unemployed. The number of long-term unemployed has declined by 921,000
over the past year.
Establishment
Survey Data
Total
nonfarm payroll employment increased by 162,000 in July, with gains in retail
trade, food services and drinking places, financial activities, and wholesale
trade. Over the prior 12 months, nonfarm employment growth averaged 189,000 per
month.
In
July, average hourly earnings for all employees on private nonfarm payrolls
edged down by 2 cents to $23.98, following a 10-cent increase in June. Over the
year, average hourly earnings have risen by 44 cents, or 1.9 percent. In July,
average hourly earnings of private-sector production and nonsupervisory
employees were unchanged at $20.14.