Economy Watch: Debt Ceiling Done, Now Back to Worrying about Jobs
Corporate downsizing announcements spiked to a 16-month high in July; a Bureau of Labor Statistics report shows a wide variation in jobless rates among metro areas; and the non-manufacturing sector is growing, but slowly.
By Dees Stribling, Contributing Editor
In the hubbub surrounding the debt-ceiling drama, it was temporarily easy to forget that this is also the first full week of a new month, which means new U.S. employment numbers–first the parade of unofficial indicators of various kinds, then the official Bureau of Labor Statistics numbers for the nation at the end of the week.
So now the ugly reality of the employment picture is coming back in focus. According to Chicago-based outplacement firm Challenger, Gray & Christmas on Wednesday, corporate downsizing announcements spiked to a 16-month high to about 66,000 in July. That’s up more than 60 percent from June, when employers said they planned to cut 41,000 workers.
Payroll processor ADP was also out with jobs numbers on Wednesday, reporting that private-sector companies added 114,000 employees in July, down from the 145,000 new positions the company said were added the month before. Then again, last month ADP was completely at odds with the official employment numbers, which saw only 18,000 new jobs added.
Employment picture mixed in most metro areas
Still, some progress in employment in many metro areas has been made since this time last year. The Bureau of Labor Statistics reported on Wednesday that unemployment rates were lower in June than during the same month a year earlier in 224 of the 372 major U.S. metropolitan areas, higher in 127 areas, and unchanged in 21 areas. The question now is whether the economy can hold onto these modest gains in the next few months.
Naturally, there’s a wide variation among the metro areas. According to the BLS, 12 areas were enduring jobless rates of at least 15 percent, while nine areas enjoyed rates of less than 5 percent. El Centro, Calif., and Yuma, Ariz., recorded the highest unemployment rates in June 2011, 28.5 and 26.9 percent, respectively. Among the 49 metro areas with a population of 1 million or more, the highest unemployment rates in June were in Riverside-San Bernardino-Ontario, Calif., at 14.2 percent, and Las Vegas-Paradise, Nev., at 13.8 percent.
At the other end of the spectrum, Bismarck, N.D., registered the nation’s lowest unemployment rate, 3.6 percent. The areas with the next-lowest rates were Lincoln, Neb., and Fargo, N.D.-Minn., coming in at 4.1 and 4.2 percent, respectively. The lowest jobless rate among the large metro areas was in Oklahoma City, whose rate was 5.7 percent in June.
Non-Manufacturing Index points to slower growth
After a crummy manufacturing report earlier in the week, the Institute for Supply Management reported on Wednesday that its Non-Manufacturing Index registered 52.7 percent in July, which is 0.6 percentage points lower than June’s 53.3 percent. That means that the non-manufacturing sector of the U.S. economy is, in fact, still growing, but at a slower rate than before.
Some components of the index grew in July, such as business activity, inventories and imports. Most saw a month-over-month slowdown, however, such as in new orders, employment, supplier deliveries, prices, backlog of orders and new export orders.
Wall Street put a stop to its run of bad days on Wednesday by eking out a few gains. The Dow Jones Industrial Average was up 29.82 points, or 0.25 percent, while the S&P 500 gained a stronger 0.5 percent and the Nasdaq advanced 0.89 percent.