Total U.S. nonfarm employment grew in July for the 58th consecutive month as 215,000 jobs were created, decelerating slightly from the 231,000 jobs that were created the previous month. However, job totals were revised upward for the previous two months by a combined 14,000. Moreover, Julyís tally marked the 15th time in the last 17 months that job gains surpassed the 200,000 level. In July, the private sector expanded for a record 65th consecutive month, adding 210,000 jobs, while the government sector gained 5,000. The unemployment rate held steady in July at a seven-plus-year low of 5.3 percent, and was 0.9 percentage points below its rate of a year ago. However, with only 69,000 workers entering the labor force in July, the labor force participation rate was unchanged at 62.6 percent, matching the lowest rate in 38 years (since October 1977). The number of planned job cuts announced by U.S. companies spiked 135 percent in July to 105,696, the highest monthly tally since September 2011. More than half of the cuts were the result of massive troop and civilian workforce reductions announced by the U.S. Army as wars in Afghanistan and Iraq wind down and pressure to cut government spending continues. Led by Microsoft, the technology sector announced several major workforce reductions, with cuts totaling nearly 19,000. The Labor Department reported that the average work week was unchanged in July at 33.7 hours and was flat year-over-year.
Total nonfarm payroll employment expanded for the 58th consecutive month, increasing by 215,000 in July, decelerating from the 231,000 jobs that were created the previous month. July’s tally marked the 15th time in the last 17 months that job gains surpassed the 200,000 level. Additionally, the job figures for May were revised upward from 254,000 to 260,000, and those from June were revised upward from 223,000 to 231,000. Job growth during the 58-month expansionary streak has averaged approximately 203,000 jobs per month. Economists believe that approximately 125,000 jobs must be created per month just to keep up with new workers entering the workforce. Led by job gains in retail trade (+36,000), food services and drinking places (+29,000), health care (+28,000), professional and technical services (+27,000), financial activities (+17,000), manufacturing (+15,000), and transportation and warehousing (+14,000), private-sector payroll employment increased for the 65th straight month, rising by 210,000 in July after gaining 227,000 the previous month. Approximately 13.0 million jobs have been created in the private sector over the last 65 months, an extension of the longest streak on record for private sector job growth. Meanwhile, government employment has declined in 37 of the last 62 months although gained 5,000 jobs in July and has risen modestly in five of the last six months. Over this 62-month period, government employment has fallen by about 1.1 million. The economy (both the private and government sectors) has fully recovered the 8.7 million total jobs lost between the start of the recession in December 2007 and February 2010 plus has created an additional 3.7 million jobs.
The unemployment rate held steady in July at a seven-plus-year low of 5.3 percent (lowest since April 2008), and has fallen in seven of the last 12 months and was 0.9 percentage points below its rate of a year ago. The underemployment rate (a.k.a. U-6 unemployment rate), a measure of labor underutilization which accounts for part-time workers due to economic reasons as well as discouraged job seekers, ticked down 0.1 percentage points to 10.4 percent in July, matching a seven-year low (lowest since June 2008). Moreover, the underemployment rate has declined in 10 of the last 12 months and was down 1.8 percentage points from a year ago.
With the household survey showing that only 69,000 workers entered the labor force in July, the labor force participation rate, the share of working-age people (16 years and older) in the labor force was unchanged at 62.6 percent, matching the lowest rate in over 38 years (since October 1977) when Jimmy Carter was president. The aging of America, a modest jobs recovery from the last recession which has kept workers in school longer, and the rising number of workers on disability insurance are theories offered to explain the fall in the labor participation rate since it peaked at 67.3 percent in 2000.
The number of long-term unemployed (jobless for 27 weeks and over) increased in July from 2.1 to 2.2 million, representing 26.9 percent of the unemployed population. Since April 2010, the number of long-term unemployed has fallen by about 4.5 million, and in the last year, by approximately 1.0 million.
The Labor Department reported that the average work week for production and nonsupervisory employees on private nonfarm payrolls was unchanged in July at 33.7 hours, just 0.1 hour below February’s seven-plus-year high, but was flat year-over-year.
Challenger, Grey & Christmas reported a surge in the number of planned job cuts by U.S. companies in July, rocketing 135.7 percent to 105,696, the highest monthly tally since September 2011, and were up a whopping 125.4 percent year-over-year. More than half of the July job cuts were the result of massive troop and civilian workforce reductions announced by the United States Army. The cutbacks will eliminate 57,000 from government payrolls over the next two years. While the government sector saw the heaviest cuts last month due to military cutbacks, the technology sector also announced several major workforce reductions. Microsoft shuttered the recently acquired Nokia division, which resulted in 7,800 job losses. Electronics and telecommunications equipment manufacturer Qualcomm announced plans to shed 4,500 workers. Chipmaker Intel Corp. also announced workforce reductions totaling 3,180 during the month. Together, computer and electronics firms announced 18,891 job cuts in July. John A. Challenger, CEO of Challenger, Gray & Christmas said, “When the military makes cuts, they tend to be deep. In fact, the last time we saw more than 100,000 job cuts in September of 2011, it was 50,000 cuts by the U.S. Army that dominated the total. With wars in Afghanistan and Iraq winding down and pressure to cut government spending, the military has been vulnerable to reductions. The transition from the military to the civilian workforce is always challenging, but the economy is in a much better position to absorb this influx of job seekers now, compared to two or three years ago. This does not mean it will be easy for these service men and women, most of whom undoubtedly thought the military would offer career-long job security.”