United States: July payrolls increase but undershoot expectations
August 2, 2013
Non-farm payrolls grew by 162,000 in July, which was less than June's revised increase of 188,000 (previously reported: 195,000). The reading was below market expectations of a 175,000 rise.
The private sector is still almost entirely responsible for new hiring, adding 114,186 jobs in July. The largest gains were registered in retail, leisure and hospitality, as well as the financial services sector. The public sector added a mere 1,000 jobs, maintaining the negative trend seen throughout most of the past three years.
The U.S. economy has now recovered 6.7 million jobs since February 2010, which marked the trough of the crisis in the labour market. Despite the improvement over the past three years, the economy has 2 million fewer jobs than in the January 2008 peak.
The unemployment rate - derived from a different survey - dropped from 7.6% in June to 7.4% in July, its lowest level in over four years. The reading slightly beat market expectations, which had the jobless rate falling to 7.5%. The drop in unemployment, despite lower than expected payroll gains, is driven partly by a continuing decline in labour force participation rates.
FocusEconomics Consensus Forecast panellists anticipate unemployment to average 7.5% this year, which is unchanged from last month's forecast. For 2014, the panel expects the unemployment rate to drop to 7.0%.
Author: Carl Kelly, Economist