Economy Watch: Employment Improving, But Growth Still Tepid

Dees Stribling, Contributing Editor

The monthly unemployment numbers for July were relatively weak—up 176,000 jobs—and it turns out that the previous months weren’t quite as strong as first reported, according to revisions released by the Bureau of Labor Statistics on Friday. The net increase in jobs in May was revised downward from 195,000 to 176,000, and the change for June was revised from a gain of 195,000 to one of 188,000. With these revisions, employment gains in May and June combined were 26,000 less than previously reported.

Still, some sectors of the economy are hiring at a fairly healthy rate, though a lot of the increase comes from (relatively) low-paying jobs. For instance, retail trade added 47,000 jobs in July and has added 352,000 over the past 12 months. Within leisure and hospitality, employment in food services and drinking places increased by 38,000 in July and by 381,000 over the year. Yet some (relatively) higher-paying sectors have been adding jobs as well. Financial services employment increased by 15,000 in July, with a gain of 6,000 in securities, commodity contracts and investments. Over the year, financial services have added 120,000 jobs.

Other kinds of employment have stagnated or at least slowed down. Manufacturing employment—which was one of the only growth sectors in the early years of the recession—was essentially unchanged in July and has changed little, on net, over the past 12 months. Employment growth in health care has slowed down: it was essentially unchanged July, and so far in 2013 has added an average of 16,000 jobs per month, compared with an average monthly increase of 27,000 in 2012.

Despite July’s disappointment, other overall measurements of unemployment have been improving, albeit slowly, in recent months. The BLS’s U-6, which includes not only people counted as unemployed by the standard measurement, but also discouraged workers and people who have part-time jobs but who want full-time ones, stood at 14 percent in July. That was an improvement compared with June, when the rate was 14.3 percent, and July 2012, when the U-6 was 15.2 percent.

Personal income up in June

The Bureau of Economic Analysis reported on Friday that personal income increased $45.4 billion, or 0.3 percent, and disposable personal income—the kind everyone likes, income after taxes—increased $33.6 billion, also 0.3 percent, in June. Personal consumption expenditures—people out buying things—increased $59.4 billion, or 0.5 percent, during the month.

Private-sector wages and salaries increased $38 billion in June, compared with an increase of $19.1 billion in May, according to the BEA. Goods-producing industries’ payrolls increased $5.9 billion, with manufacturing payrolls up$4.2 billion. Services-producing industries’ payrolls increased $32 billion in June, compared with an increase of $14.2 billion in May.

The public sector, however, is still feeling the sequestration blues. The BEA reported that government wages and salaries decreased $0.5 billion in June, following an anemic increase of $0.3 billion in May.

Despite the jobs numbers, Wall Street managed to claw its way to a positive day on Friday. The Dow Jones Industrial Average was up 30.3 points, or 0.19 percent, while the S&P 500 gained 0.16 percent and the Nasdaq advanced 0.38 percent.