The July Jobs Picture

The July Employment report was released at 8:30 today by the government. Unemployment went up from 8.2% in June to 8.3% in July. This is not good to say the least. The survey also shows that the economy created 163,000 jobs. This is more than was expected by the "experts" (who also expected unemployment to stay at 8.2%), but it is still much too low to reduce the unemployment rate. (I guess that is obvious, since the unemployment rate rose.)

Overall, this is a murky report. It clearly shows that the economy is still limping, but the number of jobs created increased over the three prior months which is positive. The biggest problem with this data is that July is one of the two months for which the government makes the biggest seasonal adjustment. All those teachers on summer vacation and others with seasonal jobs mean that the "adjustment" is about seven times the number of jobs reported to have been created. In other words, the accuracy of the adjustment is far more important than the accuracy of the actual survey in determining whether or not the figure for jobs created is accurate. For example, if the adjustment is just off by 10%, the number of jobs created could have been as low as about 50,000 or as high as 275,000.

We will need to see the August numbers in order to really tell if the economy is at least creating more jobs than it was in the second quarter even though even the slightly increased number is not enough to keep the unemployment rate from rising.