3 August 2001, 16:38  US Jobs Report-OVERVIEW

--US July payroll jobs -42,000; jobless rate unchanged at 4.5%
--US July avg hourly earnings +0.3%; June revised to +0.5%
--US July avg hourly earnings +4.4% from yr ago; June +4.3%
--US July available labor pool down to 10.9 mln; June 11.0 mln
--US July workweek unchanged; manufacturing workweek +0.1 hr
--US June payroll jobs revised to -93,000 from -114,000
--US May payroll jobs revised to +41,000 from +8,000
--US July factory jobs -49,000; construction jobs +1,000
--US July services jobs -23,000; govt jobs +31,000; retail +6,000
--US July temporary workers -42,000

By Simon Kennedy
Washington, Aug. 3 (BridgeNews) - The listless U.S. economy lost jobs for the second successive month in July, as non-farm payrolls fell 42,000, the Labor Department reported Friday, amid further cutbacks in factory jobs. However, the unemployment rate remained at 4.5%.
Analysts surveyed by BridgeNews had projected a 60,000 decrease in payrolls and an unemployment rate of 4.6%. In June, a revised 93,000 jobs were lost as the unemployment rate rose to 4.5%.
The labor market has slackened throughout this year amid the weakest economy in eight years after growing at annual rate of just 0.7% in the second quarter. Payrolls have fallen in three of the past four months, with the level of unemployment now far above the 30-year low of 3.9% in October and, according to many analysts, well on the way to hitting 5% by the year-end.
While the economy hasn't contracted this year, many analysts fear that rising layoffs will force consumers to pare spending that has underpinned the economic activity this year, further undermining the economy. "While most survey measures suggest consumer sentiment have stabilized recently, softer job markets could induce a further deterioration in confidence and spending intentions," Federal Reserve Chairman Alan Greenspan said recently.
The central bank has sought to prop up the economy by slashing interest rates on six occasions this year by a cumulative 275 basis points. It is expected to ease monetary policy again when officials gather Aug. 21.
Deep job cutbacks in manufacturing, where output and employment has contracted in each of the past 12 months, again took their toll on the labor market in July. Factories shed 49,000 workers, after cutting 113,000 positions in June as they battle against sluggish demand from home and abroad, high financing costs and a strong dollar. In the latest month, producers of electrical equipment and industrial machinery reported the largest declines.
Together these industries account for about 40% of the 632,000 manufacturing jobs lost this year.
Despite its woes, manufacturing lifted its average workweek by 0.1 hour, to 40.8 hours. Factory overtime hours were unchanged at 3.9 hours. However, the weak job market was not reserved to the blue-collar sectors.
Service-producers increased payrolls by just 5,000, largely because of 31,000 increase in government payrolls. However, the narrow services category, which includes restaurants, hotels and legal services, cut 23,000 jobs.
The temporary workforce was reduced by 42,000, the 10th consecutive monthly decline, which will interest analysts who believe this sector serves as a leading indicator for employment conditions. Such workers tend to get laid off 5 first as companies downsize amid slower business. However, the labor utilization pool, representing the sum of those unemployed and those who say they want a job but are not actively seeking work, fell to a seasonally adjusted 10.9 million from 11.0 million in June. The overall workweek was unchanged at 34.2 hours.

AVERAGE EARNINGS
Providing further room for the Fed to maneuver, average hourly earnings rose a seasonally adjusted 0.3%, or 4 cents, in July to $14.35. Analysts had expected a 0.3% rise in July after a revised 0.5% jump in June. Hourly earnings were up 4.4% from a year earlier, an acceleration from June's revised 4.3%.

WHAT WAS EXPECTED
July non-farm payroll growth was at the high end/low end of private forecasts in the BridgeNews survey, which ranged from up 20,000 to down 246,000
Expectations for the unemployment rate were 4.6% to 4.8%, while forecasts for average hourly earnings ranged from up 0.2% to up 0.4%.

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