9th Aug 11
US unemployment rate falls in July
by Harry Oldfield
Porgess: private sector jobs in US help reduce unemployment rate
Porgess: private sector jobs in US help reduce unemployment rate
Some 117,000 jobs were created in the US economy last month, a better-than-expected outcome, the US Labor Department revealed.
The figure was an improvement on June’s, which was revised up to 46,000 from 18,000. The overall rate of unemployment in July dropped from 9.2 per cent to 9.1 per cent. The news also helped the Dow share index to close higher, after having last Thursday suffered its biggest one-day fall since 2008 due to concerns over the global economy.
The amount of unemployed people dropped from 14.1 million from 13.9 million. President Barack Obama pointed to the number of jobs in the private sector which were added not just in July but for the last year-and-a-half, but acknowledged that they must do better. He said that the country will get through this, saying that things will get better and everyone will get there together.
Analysts welcomed the news of the improved job situation, which came after recent consumer spending and economic growth data had raised questions over the US recovery’s strength. ING’s senior US economist, James Knightly, said that the figures provide some temporary relief, explaining that people had been fearing the worst but the numbers were better than expected.
Businesses added 154,000 new jobs, but the government slashed 37,000 jobs according to figures from the non-farm payroll. However, 23,000 of those cuts were related to a temporary closure of the state government in Minnesota which resulted in workers not being paid that month.
Health care, hotels, manufacturing, restaurants and retail were all able to create jobs. There was also an increase of 0.4 per cent in average hourly earnings, although weekly earnings remained the same.
However, the jobs figures might only provide worried investors with limited reassurance about the state of the economy in the US. The numbers benefited from the fall in the amount of people looking for employment which reduced the amount of people who were registered as unemployed. That indicates that instead of finding employment, some job seekers are giving up looking for work.
Stock markets opened higher in the US yesterday, but dropped back over the morning. DB Advisors’ chief global economist, Josh Feinman, said that the news allays the fears of heading back into a recession, but described the labour market as still being sick and said it serves as a reminder of the enormous hill which still needs to be climbed.
US traders are also worried about the eurozone’s ongoing sovereign debt issues which threaten to undermine economic growth in Europe. Mt Feinman added that he thinks Europe’s sovereign debt issues are still weighing on people. He added that people are unsure how things are going to end up there.
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