Jobless rate dips to 9.1%, 117K jobs added in July; Update: Dip comes from labor force exodus

The US economy produced a net gain of 117,000 jobs in July, cutting the jobless rate a tenth of a point to 9.1%, according to today’s report from the Bureau of Labor Statistics.  That beats economists’ predictions of a net gain of 85,000 jobs and maintaining the 9.2% jobless rate from June.  The news comes as a welcome, if very mild, positive surprise after yesterday’s falloff on Wall Street.

Unfortunately, the government reporting sites were down this morning, so I’ll update in a little bit with the numbers.  However, a Reuters headline from earlier in the morning captured the essence of the reporting on today’s figures: “Make or break jobs report as markets fear recession.”  If they expected the numbers today to ease those fears, they will come away disappointed.  While this job creation number is the best we’ve seen in a few months, it barely makes the maintenance level — the number of jobs we have to add to keep up with population growth.  The fall in the jobless rate moves the number in the right direction, but only if it didn’t come from more flight of workers from the workforce.

Reuters also notes at the same link (the headline has changed) that May and June numbers were revised to add 56,000 more additional jobs in those months:

U.S. job growth accelerated more than expected in July as private employers stepped up hiring, a development that could ease fears theeconomy was sliding into a fresh recession.

U.S. payrolls increased 117,000, the Labor Department said on Friday, above market expectations for an 85,000 gain. The unemployment rate dipped to 9.1 percent from 9.2 percent in June, but this was mostly the result of people leaving the labor force.

The payrolls count for May and June was revised to show 56,000 more jobs added than previously reported

The report was the first encouraging piece of economic data in some time.

Again, it’s only “encouraging” in the sense that it wasn’t overtly discouraging.  An addition of 117K net jobs is a sideways move, not an advance, except in the sense that it wasn’t backward.  It’s not a number that will encourage an increase in demand, although it won’t curtail demand, either.  It’s a stagnation number, especially given the chronically high unemployment that we have seen over the last three years.

National Journal’s report takes the correct approach:

The United States picked up 117,000 jobs in July and revised upward another 56,000 jobs from May and June — two bright spots after an awful week of economic news. Dow futures jumped about 100 points. The unemployment rate fell slightly to 9.1 percent.

The Labor Department report provided a slight boost to a stumbling economy.

I’d quibble about the “brightness” of these spots, but they do stand out at the end of a very bad week, and “slight” is exactly correct.  It beats 9.3% and 40,000 jobs added, which was my guess, or 9.2% and 85,000 net jobs, which was the consensus of economists — but not by all that much.

Update: According to Bloomberg, the decline in the jobless rate comes from a decline in the work force:

Payrolls rose by 117,000 workers after a 46,000 increase in June that was more than originally estimated, Labor Department data showed today in Washington. The median estimate in a Bloomberg News survey called for a July gain of 85,000. The jobless rate dropped to 9.1 percent as more Americans left the labor force, while average hourly earnings climbed 0.4 percent.

That’s one reason why the actual report comes in handy — and why the BLS servers should have been bolstered for the traffic today.

Update II: More from Bloomberg:

The jobless rate declined as 193,000 people left the labor force and the number of unemployed dropped by 156,000. The share of the eligible population holding a job declined to 58.1 percent, the lowest since July 1983.

Don’t expect much cheering over this report on Wall Street, even if you hear it from Pennsylvania Avenue.