Mediocre Jobs Report: Unemployment Steady, But Too Few Jobs Added
In the weakest recovery since the Great Depression, nearly the entire reduction in unemployment since October 2009 has been accomplished through a significant drop in the percentage of adults participating in the labor force, either working or looking for work.
Growth slowed to 1.9 percent in the first quarter from 3 percent the previous period, and was largely sustained by consumers taking on more car and student loans, business investments in equipment and software, and residential construction. The housing market is improving and that should lift construction a bit more but overall, the economy and jobs growth should remain too slow to genuinely dent unemployment.
The June jobs report indicates growth may be even slower in the second quarter, and the economy is dangerously close to stalling and falling into recession.
Manufacturing added 11,000 jobs. Other big gainers included health care, professional services, leisure and hospitality, wholesale trade, and local governments.
Construction gained only 2,000 jobs, and big losers were retail trade, transportation and warehousing, information and communications, and federal governments.
Gains in manufacturing production have not instigated stronger improvements in employment largely, because so much of the growth is focused in high-value activity. Assembly work, outside the auto patch, remains handicapped by the exchange rate situation with the Chinese yuan.
Recent moves by China to further weaken its currency and to close its markets to stimulate its own flagging demand indicate matters will get worse without a substantive response from Washington. Also, concerns about health insurance costs, once Obamacare is fully implemented, are discouraging employers.
The financial crisis in Europe and mounting problems in China's housing and banking sectors continue to instigate worries among U.S. businesses about a second major recession, and those discourage new hiring. The U.S. economy continues to expand at a torturously slow pace, and is quite vulnerable to shock waves from crises in Europe and Asia.
Factoring in those discouraged adults and others working part time for lack of full time opportunities, the unemployment rate is 14.9 percent.