Today’s Labor Department report on employment shows the job market continues to weaken as does our economic recovery. While manufacturing continues to lead the recovery with employment rising for the seventh consecutive month in July, with 36,000 jobs added, signs still show overall the industry is decelerating. The added jobs in July were largely due to seasonal factors in the auto sector. But changes in most other manufacturing industries were negligible which shows the manufacturing recovery is slowing down. While manufacturing has added 26,000 jobs per-month so far this year, this is still just a small fraction of the 91,000 jobs lost per-month during the prior two years. If this pace is maintained, U.S. manufacturing employment will not return to its pre-recession level for another six years.
Today’s news shows little evidence that the labor market will significantly improve in the next couple of months. After starting to increase last October, temporary employment — a good indicator of future permanent jobs — slowed in recent months and actually declined in July.
The labor market over the past few months has clearly worsened, with private sector job growth falling 67 percent in the May-July period compared to the three months ending in April. This is a worrisome sign that employer’s confidence in the underlying strength of the recovery is tepid. At the same time, the unemployment rate remained stuck at an uncomfortably high 9.5 percent in July. This will likely weigh on consumer confidence and spending in the near term.