Some Less Than Encouraging Employment Numbers

On the positive side, private sector employment in July increased for the seventh consecutive month, though by only 71,000, which at least was some improvement from June's paltry 31,000 increase.

The July employment data provided little to cheer about as non-farm payroll employment was down by 131,000 jobs at a seasonally adjusted annual rate, following a 221,000 decrease in June. The numbers were adversely affected by planned layoffs of temporary decennial workers at the Census Bureau - 225,000 in June and 143,000 in July.

The biggest gains were in the manufacturing sector, which was up by 36,000 jobs - including 21,000 new jobs making motor vehicles and parts - and health care, up 27,000. Employment of private temporary workers was also a disappointment, falling 5,600, the first decrease in 10 months.

At this still relatively early stage of the recovery, businesses have been employing temporary workers, hedging their hiring bets until they are certain that the growing demand they have seen for their products and services is sustainable. Many of these temporary positions eventually become permanent, so it is possible that this transition is responsible for July's decline.

Although the unemployment rate held steady at 9.5 percent in July, the number of those employed declined, indicating that some job seekers left the labor force, presumably because they were discouraged by dismal prospects for employment.

In one positive sign, private sector average employment hours edged up from 34.1 in June to 34.2 in July. Also, average hourly earnings were up $0.04. Employers may be reaching the point where they have to use their current workers more and give a few raises.

NAHB is forecasting slow employment gains for the remainder of the year as GDP continues to show some growth and businesses find that they can no longer depend on the productivity growth of their current workers to increase output.

- Courtesy of NAHB