The Recovery Marches On

The July employment data released this morning by the Bureau of Labor Statistics was better than the 90,000 expected and much better than the pessimistic forecasts by some analysts.

  • Employers added 117,000 net new payroll jobs last month including 154,000 in the private sector offset by minus 37,000 in the public sector. The latter included 30,000 employees idled when the Minnesota state government temporarily shut down.
  • May and June payrolls were revised higher by a combined 56,000.
  • Growth was broad-based, led by healthcare (+37,000), professional and business services (+34,000), retail trade (+26,000) and manufacturing (+24,000).

  • Growth in retail employment means that retailers expect customers to keep walking through their doors, which will support the economy since consumer spending accounts for 70 percent of GDP.
  • The gain in professional and business services suggests continuing momentum in the office market and the potential for the market to repeat its strong second-quarter performance when vacancy fell by a robust 40 basis points and absorption hit its highest level in nearly three years.
  • The gain in manufacturing will support the industrial market, implying greater demand for properties required for the production and distribution of goods.
  • The overall gain in employment means that more households will have the means to lease an apartment.
  • Unemployment moved down a notch to 9.1 percent but for the wrong reasons as 193,000 people left the labor force and the participation rate slipped to 63.9 percent. On the bright side, average hourly earnings jumped by 0.4 percent last month.

Employment isn’t where we would like it to be, and it will be a slow return to full employment. Nevertheless, today’s report from the BLS means that the U.S. recovery remains intact.