The July Employment Situation

The United States unemployment rate held steady at 9.5 percent, a result of losses in both jobs and the labor force. The job losses occurred in the public sector, the largest component of which was the Census wind-down. While the long-term unemployed slipped a bit from 6.8 million to 6.6 million, 6.6 million remains a very large number that puts a damper on expected household expenditures and hints at the human costs of the recession.

Non-farm jobs fell 131 thousand, driven by a gain of 71 thousand private sector gains and 202 thousand public sector losses. Revisions to the data indicate that last month’s annualized decline of 1.1 percent was revised down to a decline of 2 percent.

Last month I wrote about the United States employment situation:

Our back-of-the-envelope July job change projection would be driven by a presumed Census worker contraction of 230,000 that would be offset by private-sector gains of 80,000 resulting in an overall 150,000 non-farm job drop. If the employment survey drop matched the job drop and the labor force contracted by 300,000 then the unemployment rate would be a bit over 9.4 percent in July.

We ended up with an unemployment rate of 9.5 percent, a non-farm job drop of 131,000, driven by a 70,000 private-sector job gain, and a 202,000 public sector job drop. The 202 thousand public sector jobs lost were compositionally different than I expected last month: only 143 thousand were Census workers. The remainder included 10 thousand Federal-non-Census workers, 10 thousand state workers, and 38 thousand local government employees. The lack of revenues and balanced-budget requirements of the states and localities are starting to show more seriously in the public sector jobs data.

Our back-of-the-envelope August job change projection consists of a presumed Census worker contraction of 80,000 that would be roughly offset with private-sector job gains. However, a reasonable State and Local government job loss rate would be 40,000 jobs. These changes along with a 100 thousand person contraction in the labor force (due to the Census and State/Local government wind-downs) would imply the August unemployment rate would hold steady at 9.5 percent. The implied annualized non-farm jobs growth rate would be minus 0.3 percent.

Comments are closed.