More private jobs in July, but economy overall lost 131,000

Businesses took on another 71,000 new workers in July, continuing the trend of creating a trickle of new jobs since the beginning of the year, the Labor Department reported Friday morning.

About half the job gains came in manufacturing, where auto companies have been ramping up production. Manufacturing employment has expanded by 183,000 since December, accounting for nearly a third of the 630,000 private jobs created so far this year.

The steady but modest stream of new jobs was not enough to draw down the unemployment rate, which hovered at 9.5 percent for a second month. The number of long-term jobless was unchanged at 6.6 million — nearly half the unemployed.

Governments at all levels continued to shed jobs. The federal government laid off another 143,000 temporary census workers and state and local employment fell by 59,000 as shrinking revenues forced city and state governments to shed staff.

The government layoffs more than offset the modest gains in private jobs, leading to an overall decrease of 131,000 jobs in the economy during the month.

President Obama, speaking at Gelberg Signs, a small business in Washington that is expanding and hiring workers, hailed the seventh straight month of private job creation as a good sign for the economy but said the progress “needs to come faster.”

The gains in private jobs were close to the 90,000 that Wall Street economists were predicting, and could soothe investors and consumers worried about the U.S. economy relapsing into a double-dip recession. But along with a downward revision to 31,000 in the number of jobs created in June, the figures confirm that the economy slowed further this summer after a burst of job growth in the spring.

“The jobs release could be more important than usual” for the markets because of the extreme bearishness about the U.S. economy in recent weeks, said Raghav Subbarao, analyst at Barclays Capital. He believes the economy is in better shape than most investors believe right now.

But U.S. Chamber of Commerce economist Martin Regalia called the job gains “paltry” and blamed Congress and the administration for causing employers to put their hiring plans on hold out of fear they will face increased taxes and regulation in coming months.

One possible source of cheer in the report was the lack growth in temporary jobs for the first time in a year — suggesting that employers may be making a critical shift into taking on permanent, full-time staff rather than relying on temp workers to manage new demand for their services. Temporary jobs actually declined by 6,000 in July.

The workweek rose slightly by 0.1 hour to 34.2 hours, and hourly earnings eked out another 0.2 percent gain. The growth in average wages has been weak, though, at 1.8 percent in the last year, the department said.

Among the industries adding jobs was oil and mining, where 7,000 people were employed mostly in support services, likely reflecting the clean-up of the oil spill on the Gulf coast. 

Health care, the only industry that added jobs through much of the recession, took on another 23,000 workers last month.