Mixed Messages on U.S. Job Market

By Toni Vranjes

August 3, 2012

In a hopeful sign, employers created more jobs than expected last month. However, the unemployment rate increased slightly to 8.3 percent.

Payrolls increased by 163,000, beating economists’ expectations of 100,000 new jobs. Employment growth occurred in professional and business services, food services and drinking places, manufacturing, health care, and wholesale trade.

While several areas grew, the public sector was hard hit. Overall, the government shed 9,000 jobs last month.

Since the beginning of the year, employers have created an average of 151,000 jobs each month, according to the U.S. Labor Department.

In a blog post, economist Diane Swonk called the July payroll data “a welcome surprise, but not a game changer.” She compared the payroll data to the findings of the household survey, which determines the unemployment rate. The household survey showed a decline in employment and an increase in the number of unemployed, noted Swonk, chief economist at Mesirow Financial. This pushed unemployment up, despite a slight reduction in the labor force.

The latest employment report also showed a slight rise in the “underemployment rate.” This broader measure includes discouraged people who have stopped looking for work, as well as part-time workers who would prefer full-time jobs. The underemployment rate was 15 percent in July, up from 14.9 percent the previous month.

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