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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