July Non-Farm Payrolls Up 162,000; Jobless Rate 7.4%

WASHINGTON - The July employment report is weaker than on its face, suggesting further moderate economic growth and at best showing a modest trend better.

July payrolls rose 162,000 and June-May payrolls were revised 26,000 lower on net. This leaves the 12-month average gain at 189,000, a pleasant up-glide but not an acceleration that would indicate any urgent need for a change in federal policies.

July suffers severe seasonal adjustment -- unadjusted jobs fell 1.1 million, reflecting the usual cuts in local education jobs (at -1.2 million this year, accounting for the entire movement). Given this adjustment problem one might simply want to conclude that the July data are about at trend.

The 0.2-point drop in the unemployment rate to 7.4% also is suspicious. It was due to dip in the labor force and in participation. The Bureau of Labor Statistics terms the participation rate as showing "little movement" for the year.

Hours and earnings fell, suggesting weak incomes and less production.

Jobs composition was again skewed to lesser occupations, producing a worry that some of the jobs are only part-time. Also, the stalwart of healthcare jobs has slowed to a decade bottom -- to its weakest gain since July 2003.

Jobs included: manufacturing +6,000, construction -6,000, retail +46,800, finance +15,000 (mainly in brokers), wholesale +13,700, healthcare +2,500, temporary workers +7,700, restaurants +38,400, government +1,000 overall, with local education hiring again at +10,100.

Market News International is a real-time global news service for fixed-income and foreign exchange market professionals. See www.marketnews.com.

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