WASHINGTON— U.S. companies hired fewer workers than expected last month, and there also were fewer jobs added in May and June. Still, the US Labor Department says the economy added enough jobs in July to lower the unemployment rate to 7.4 percent - the lowest in 4 and a half years. But analysts say the mixed jobs report suggests a worrisome trend for U.S. workers.
The U.S. economy added 162-thousand jobs in July - a number consistent with slow but steady job growth. Despite a decline in unemployment of 0.2 percent, however, last month’s job numbers suggest employers remain cautious.
More telling is the quantity and quality of the new jobs. Mark Hamrick heads the Washington Bureau at Bankrate.com.
“The number of hours worked are not impressive, earnings declined, and there’s a large number of the composition of the jobs in here - have been part time jobs. So all in all, it’s the quality of the jobs and the quantity of the jobs being created are both very much in question,” said Hamrick.
The number of jobs added last month also was the fewest since March, and well below consensus expectations of about 185,000. Reaction on Wall Street has been muted. Others remain optimistic, though, about stronger job growth in the second half of the year.
Ken Simonson, at the National Association for Business Economics, points to the group’s latest survey. “The firms said that, on balance, they had added to their head count over the last quarter, and over the next six months they expect to continue hiring, on balance, at a pretty high rate."
Also on the positive side - manufacturing added six thousand jobs - the first gains since February. And hiring in professional and technology services also increased.
Hamrick said another bright spot for American workers is that global economies are starting to see signs of stability.
“Europe is looking a little better, and China has reported some modest growth. The U.S. economy is dependent on a strong global economy, and that includes U.S. manufacturers. There’s more demand overseas, that helps U.S. manufacturers, and they can start thinking about growth going forward,” he said.
Another issue that investors likely will not have to worry about is the central bank making any sudden changes in its monetary policies. Analysts say sluggish economic growth in the second quarter and smaller than expected job gains in July suggest the Federal Reserve is unlikely to scale back anytime soon on bond purchases that have kept long-term interest rates at record lows.