Analysts may have talked a good game, but in their hearts they knew the Friday jobs report from the U.S. Department of Labor Statistics would be bad news. They were not surprised.  Wall Street dealt with the staggering numbers with relative ease as the dollar slumped and the euro moved higher in early morning trading.

Despite the non-farm payroll loss of 131,000, bulls continued to assert themselves in volatile marketplaces.  Overall, corporate earnings are strong and while companies are talking additional trimming rather then new jobs, there is a feel of a very mild recovery underfoot. 

Private employment added 71,000 new jobs after adding just 31,000 in June.  Analysts had predicted 90,000 new jobs would be added in July.  These same analysts predicted overall employment falling by 65,000.

The unemployment rate held firm at 9.5 percent, but there is concern that thousands of potential workers have dropped out of the system as their benefits expired.  Some analysts believe the recent extension of benefits has created the increase in unemployment.

Analysts were surprised by the 202,000 jobs trimmed in July by federal, state and local governments.  In June governments cut 252,000 workers.  The Federal government cut 154,000 jobs, state governments trimmed 10,000 workers and local governments trimmed 38,000 workers.  In the federal government’s cuts 143,000 people were temporary census workers.

Most local governments begin their new fiscal year on July 1^st.  Most local governments are under tremendous pressure to continue providing services but with reduced work forces.  Cuts in state operations can be expected to rise as just about every state in the Union is carrying significant deficits as they approach the close of their fiscal year.

Manufacturing Leading The Private Sector

In the private sector, the manufacturing sector added 36,000 workers and led the way again in July.  Manufacturing added 13,000 jobs in June.  The auto industry reversed its traditional pattern by not laying off workers in July.

The service sector added 38,000 new jobs after gaining 34,000 in June.  The temporary services sector, which has been solid since October 2009, trimmed 5,600 jobs after adding 11,200 in June.  Temporary employment averaged 45,000 new jobs per month from October 2009 to May 2010.

Of the 15 subsectors composing the private sector, three reported job losses, one was unchanged and 11 reported gains. 

• Professional and Business Services – Down 13,000
• Financial Services – Down 17,000
• Construction – Down 11,000
• Non durable good – Unchanged

 On The Positive Side

After falling to 34.1 hours in June, the average workweek increased to 34.2 in July.  Average hourly wages increased by 0.2 percent in the month as the average hourly earning rose four cents to 22.59.

These are positive signals but one of the most important numbers is the growth of the GDP.  Global markets are expecting the U.S. to add significantly to our Gross Domestic Product.  Economic growth fell to a projected 2.4 percent this year after rising to 3.7 percent in the first quarter.

Federal government expenditures now stand at 25 percent of the GDP.  The Obama Administration must either spark GDP growth or decrease the cost of government.

In early afternoon news, Goldman Sachs predicted that unemployment would rise to 11 percent and remain there through 2011.  Unemployment now stands at 9.5 percent.  Most analysts projected a rise in unemployment top 9.6 percent.

President Obama responded to the labor report saying that July marks the seventh consecutive month that the private sector has added jobs.

Tags: jobs, unemployment, US Unemployment

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