Jobs Report

Another sign the economy has turned came on Aug. 8, when the government reported that nonfarm payrolls declined by 247,000 in July. The number, while still negative, was better than analysts had expected. In addition, the unemployment rate, which some had expected to increase slightly, actually posted a slight decline, to 9.4%, compared with 9.5% in Jun.Forecasters had predicted a loss of about 325,000 jobs for the month. The July decline was the smallest since August 2008.

Clearly, there is still pain out on the street. There were 14.5 million unemployed in July, the Bureau of Labor Statistics reported, and the number of long-term unemployed—those out of work for 27 weeks or more—increased over the month by 584,000, to 5 million. Economists warn, however, that even when the recession ends, it will take several quarters before job growth returns. Nonetheless, the fact that the unemployment rate has been relatively unchanged for two months is a positive sign."July's U.S. employment report is the gift that keeps on giving. Nearly every element of it is positive—or at least as positive as it can be when employment is still falling by hundreds of thousands a month and the unemployment rate is still close to 10%," Paul Ashworth, senior U.S. economist for Capital Economics in Toronto, said in a research note.

Ashworth attributed the dip in the unemployment rate to an unexpected decline in the size of the labor force. "With the economy recovering we would expect to see more job seekers becoming active again—so this decline is probably just a temporary blip that will be reversed in the coming months," he said.The BLS said construction and manufacturing continued to shed jobs, but jobs in the motor vehicle and parts sector actually increased by 28,000 after seasonal adjustment. However, the BLS noted that previous job cuts in that sector were so deep that there were fewer workers to lay off during seasonal shutdown.