Job Market Tanks in July

August 6, 2004 ( - The all-important domestic job market - long considered a prime engine of the US economy - had a surprisingly weak month in July when employers added a mere 32,000 non-farm jobs to their payrolls.

In addition to delivering that sobering news, the US Department of Labor (DoL) also   cut its tally of job growth in May and June by a combined 61,000, adding to the report’s weak tenor. The one bright spot of the data release was that the July jobless rate ticked down to 5.5% from 5.6%.

Friday’s DoL report hit Wall Street analysts like a ton of bricks since economists participating in Reuters regular survey had been predicting a non-farm payroll gain of 228,000.   According to the DoL, the non-farm economy has added a total of 1.5 million new jobs since August. 2003.

Looking at July’s data,  e mployment gains in health care and social assistance and in professional and business services were partly offset by job losses in financial activities. In the financial sector,  employement fell by 23,000 in July.  The credit intermediation industry, which includes mortgage banking, shed 16,000 jobs over the month.  Securities, commodity contracts, and investments lost 4,000 jobs.

In the service sector, employment in health care and social assistance continued to grow, with an increase of 20,000 in July.  Year to date, employment in this industry has risen by 292,000.  Over the month, employment rose in ambulatory health care services, such as home health care services and outpatient care centers, and in hospitals. Child day care services added 7,000 jobs in July, following a gain of 8,000 in June.
Employment also continued to trend up in professional and business services in July.  That industry has added 622,000 jobs since its most recent low in March 2003.  Employment in temporary help services was little changed in July. Wholesale trade employment edged up in July, as its durable goods component added 11,000 jobs.  Wholesale trade has gained 65,000 jobs since October 2003, with most of the increase in durable goods distribution.

In the goods-producing sector, manufacturing employment edged up 10,000 in July.  Since its most recent low in January 2004 manufacturing employment has risen by 91,000, almost entirely in the durable goods area. In July, there were job gains in computer and electronic products, machinery, furniture, and paper and paper products.  Employment growth in these and other manufacturing industries was partly offset by a decline of 21,000 in transportation equipment manufacturing, reflecting larger-than-usual shutdowns of auto parts and assembly plants for annual retooling.
In July, construction employment was little changed for the second month in a row.  The industry had added an average of 18,000 jobs per month from March 2003 through May 2004.