Investing August 1, 2003

Jobless Rate Drops; Employers Still Slashing Positions

August 1, 2003 (PLANSPONSOR.com) - While the nation's July jobless rate slid for the first time since May 2002, employers continued to slash their payrolls during the month.
Reported by

The US Department of Labor (DoL) said the July unemployment rate was 6.2%, down from 6.4% in June (See  Jobless Claims Spike Higher For Week, Month) .

However, DoL officials said the decline of 44,000 jobs during the month was caused by people bailing out of the labor force, not by any surge in hiring. July’s payroll drop marked the sixth month in a row the economy has lost jobs. The government said 556,000 departed the labor force, the biggest such exodus since May 1995. Big drops in the labor force can occur as job seekers become discouraged and abandon their searches.

There were also signs of weakness elsewhere as worker hours were cut back to 33.6 hours per week in July from 33.7 hours in June. Factory hours fell to 40.1 hours a week from 40.3 hours in the prior month, according to the government

Friday’s DoL report contrasted with the expectations of private economists in a Reuters survey that payrolls would grow by 18,000 and that the jobless would only tick down to 6.3%.

The DoL announced on Thursday thatthe number of Americans filing new claims for jobless benefits last week fell unexpectedly by 3,000 to 388,000 from a revised 391,000 the week before.

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