WASHINGTON — Nonfarm payrolls shrank more than economists expected in July, losing 131,000 jobs, according to data released Friday by the Labor Department.
The unemployment rate was unchanged at 9.5%, but economists attributed part of that apparent stability to the absence of idled workers who have abandoned their job hunts. Economists expected total payrolls to decline by 63,000 jobs in July and the unemployment rate to expand to 9.6%, according to the median estimate from Thomson Reuters.
“The unemployment rate would be much higher if so many people hadn’t given up,” Diane Swonk, chief economist at Mesirow Financial, said in a research note. “This is the exact opposite of what should be happening a year into the recovery.”
Anthony Chan, chief economist for JPMorgan Private Wealth Management in New York, estimates that the U.S. economy must create 115,000 to 125,000 new jobs each month to accommodate new workforce entries due to population growth.
Private nonfarm payrolls rose by 71,000 jobs in the July report and government payrolls fell by 202,000, as 143,000 Census workers completed their federal employment. State and local government employment fell by 48,000.
The construction sector added 36,000 jobs following a 13,000 gain in June. The goods-producing sector added 33,000 jobs, the strongest gain since April. The professional and business services sector lost 13,000 jobs, the first decline for the category in 10 months.
Nigel Gault, chief U.S. economist at IHS Global Insight, described the July jobs report as weak and said it heightens pressure on the Obama administration to try to revive economic growth.