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A jobs sign hangs above the entrance to the US Chamber of Commerce building in Washington, DC. Will July's government jobs report signal a turnaround in the sluggish labor market?
The Labor Department will release its jobs report for July at 8:30 a.m. tomorrow. I'll be on dawn patrol in L.A. to report the news as it breaks, but that doesn't mean we can't take a stab at trying to figure out how the U.S. economy did job-wise last month.
For background, in the first quarter of the year, we added on average about 200,000 new jobs each month. In the second quarter, that dropped to less then 100,000. We need something on the order of 300-400,000 to get the roughly 13 million people who are currently unemployed in America back to work. The 200,000 we were getting per month in the first quarter enabled us to keep pace with new workers coming into the labor force. The 100,000 per month since means stagnation — or, as I've called it, "stuckflation," with the economy growing modestly and the unemployment rate remaining at around 8.2 percent.
ADP, a private payroll processing firm that releases its own employment report before the Labor Department each month, says the country added 163,000 new jobs in July, with small- and medium-size business creating the lion's share. Take that with a grain of salt, however, as ADP reported 176,00 new jobs for June, and the Bureau of Labor Statistics (BLS) reported only 80,000.
Economists surveyed by Bloomberg say that July saw 100,000 jobs added. Bloomberg also points out that if the unemployment rate stays above 8 percent, it will be longest period of such high joblessness since the government starting keeping track in 1948.
Second-quarter U.S. GDP growth dropped to 1.5 percent from 2 percent in the first quarter. Consumer confidence has weakened, auto sales aren't on a clear trajectory to do better than a total of 14 million new vehicles sold this year, and the housing market, while improving modestly nationally according to the latest Case-Shiller numbers, is still regaining its footing.
Oh, and don't forget that the Federal Reserve yesterday decided to take no new action on the economy, most likely deferring any changes to monetary policy to its September meeting. In Europe, the European Central Bank also decided to delay on making in major moves to stem the euro crisis.
Those two decisions may have more of a bearing on August employment, but they right now they represent another fear point for employers.
As with the past two national jobs reports, I think we'll be very lucky if we get 100,000 for July.
In California, we're getting some news on employment that's better overall that the nation, even though our unemployment rate is a lot higher. Los Angeles has also seen the jobs picture improve. But until the economy accelerated nationally, both the state and Southern California are going to continue to suffer.