CBSN

Job Growth Is Gloomy

GENERIC employment unemployment jobs economy
CBS/AP
The nation's payroll growth slowed dramatically in July with a paltry 32,000 jobs being added — a potentially troubling sign that the rough patch the economy hit in June could spread.

It was the slowest job growth of the year. Economists were expecting much stronger payroll growth of about 235,000 in July, according to a survey conducted by CBS MarketWatch.

"A terribly disappointing report," said Joshua Shapiro, chief economist for MFR, an economic consulting firm.

Payroll growth in May and June was revised lower by a cumulative 61,000, showing the job market is weaker than commonly thought. June was revised to 78,000 from 112,000 while May was revised down to 208,000 from 235,000.

"Employers got cold feet," said economist Ken Mayland, president of ClearView Economics. "Employers just don't have the confidence in the economy that we need to sustain the kind of economic growth that we've seen."

Meanwhile, a separate survey of households showed the unemployment rate fell to 5.5 percent from 5.6 percent. Economists had expected the jobless rate to remain steady.

The payrolls figure and the unemployment rate can sometimes go in different directions because they are derived from two separate statistical surveys. In addition, people without jobs may not be counted as officially unemployed if they cease searching for work.

Economists look more closely at the payroll figure as a better barometer of the health of the jobs market.

"This is the second month in a row that we have had a number much weaker than expected and they have revised down the trend. That is a really bad sign," said Robert Brusca, chief economist at FAO Economics.

Brusca dismissed suggestions that the labor market's weakness stemmed from higher oil prices.

"This is much broader than oil. There is a global slowdown going on," he said.

President Bush and his Democratic rival, John Kerry, joust frequently over the health of the economy and the availability of jobs — prominent issues in the presidential campaign.

Kerry says Mr. Bush's economic policies aren't working and squeeze the middle class. Mr. Bush insists his tax cuts have helped the economy rebound and that making those tax cuts permanent will spur more job creation. He's counting on that to help him win another four-year term in November.

Since Mr. Bush took office in January 2001, the economy has lost a net 1.1 million jobs. While the economic recovery appears to be on a solid path, the labor market recovery has been spotty.

The White House reacted to the news with "tempered optimism," according to CBS News White House Correspondent Peter Maer.

Spokesman Trent Duffy said, "It's job growth." But he admitted, "It's not satisfactory growth. We'd like to have more (jobs created)."

Without mentioning the jobs report, Mr. Bush told a gathering of minority journalists in Washington that "economic growth is strong and getting stronger."

Kerry, who was campaigning in Missouri, took a jab at Mr. Bush's campaign claim that the nation had "turned the corner."

"The president keeps saying we've turned the corner. But unfortunately, today's job numbers further demonstrate that our economy may be taking a
U-turn instead," Kerry said.

In July, hiring slowed across most industries. Among 278 industries, 49.5 percent were adding jobs in July, down from 60.1 percent in June and the lowest percentage of the year.

Goods-producing industries added 18,000 jobs, including 10,000 in manufacturing. Construction firms added 4,000.

Services-producing industries added 14,000 jobs, the lowest since August 2003. Retail lost 19,000 jobs. Financial services lost 23,000.

Job growth was seen in professional and business services, which grew by 42,000 including 5,000 temporary help jobs. Health care and education added 20,000 jobs. Government employment was flat.

The unemployment rate fell for most demographic groups. For whites, the jobless rate was 4.8 percent. For blacks, the jobless rate rose by 0.8 percentage points to 10.9 percent. For teenagers, the jobless rate was 17.6 percent.

Long-term unemployment dropped significantly. Of the 8.2 million classified as unemployed, 20.4 percent had been out of work longer than 27 weeks, down from 21.6 percent in June. The average duration of unemployment fell to 18.6 weeks from 19.9 weeks, with the median duration fell to 8.9 weeks from 10.8 weeks.