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The July snapshot of the job market proved that the government sector has declined in jobs and the private sector has barely expanded. As evidence to this fact are 14.6 million Americans still jobless, government employment which has fallen by 59,000 and the economy shedding 131,000 jobs after 143,000 temporary census workers were removed from the federal payrolls.
The employment rate remained steady at 9.5%. On an average, the private sector has added 90,000 jobs a month this year. In July, the private employment rose to 71,000 after 31,000 in June. Two-thirds of the private sector job creation occurred during the period of March and April.
Tig Gilliam, chief executive, Adecco Group, says, “It’s a double whammy because it causes people to take a psychological step back. Now, it looks like not only has the economy slowed, but maybe it wasn’t as good when it was originally reported as we thought.”
The Dow Jones Industrial Average initially went down to 160 points but later it rose 21 points to 10,653.56. The 10-year treasury yield plummeted to 2.82 percent following demand for US government debt. The two-year note dropped to 0.514 percent after an all time low of 0.494 percent during the day.
Congress, White House, and the Federal Reserve came under pressure to increase the measures being taken to bring growth in the labor market. Fed officials are considering on reinvesting proceeds from mortgage-backed securities so as to continue support to the economy.
Without strong evidence of economic stability, even expanding sectors seem wary of adding new jobs. Private employers have increased their shift timings instead of making new recruits. Overall weekly work hours rose 0.3 % and in manufacturing 0.5 %.
In July after 9 straight months of growth, temporary employment declined to 5,600. This is supported by government figures. Mr. Gilliam of Adecco says “momentum has slowed dramatically. If that’s the case and that’s where we’re going for the next couple of months, it suggests a step back in the job-market recovery.”
Since last July, state and local governments have cut 48,000 jobs. To aid state governments, a $26 billion package is set to be released but this will only be minimally effective. A weak labor market would levy pressure on incomes and consumer spending. In June, consumer credit dropped at a 0.7% annual rate. Revolving credit declined at a 6.5% rate. 6.6 million people remained jobless for 27 weeks and this accounted to 44.9% of unemployment.
This article was submitted by Rohit Arora, co-founder of Biz2Credit. Biz2Credit is a small business marketplace that connects entrepreneurs with financing options and advice to grow their business. Send all questions to
info@biz2credit.com
