“While July itself was a bit disappointing, the Fed will be looking at the cumulative improvement,” said Paul Ashworth, chief U.S. economist at Capital Economics. “On that score, the unemployment rate has fallen from 8.1 percent last August, to 7.4 percent this July, which is a significant improvement.”
But Beth Ann Bovino, senior economist at Standard & Poor’s, said she thinks Friday’s report will make the Fed delay any slowdown in its bond purchases.
“September seems very unlikely now,” she says. “I’m wondering if December is still in the cards.”
July’s decline in unemployment to 7.4 percent was derived from a survey of households, which found that 227,000 more people said they were employed. And 37,000 people stopped looking for work and were no longer counted as unemployed.
The job gain for the month was calculated from a separate survey of employers.
Though much of July’s job growth was in lower-paying industries, manufacturing, a generally good-paying sector, added 6,000 jobs. That growth was driven by gains at auto plants. Those were the first job gains at U.S. factories since February.
Jobs in professional services such as finance, accounting and information technology also rose.
Governments added jobs for the first time since April, driven by the fifth straight month of hiring by local government.
Job gains are being slowed by the economy’s tepid growth. It grew at an annual rate of just 1.7 percent in the April-June quarter, the government said this week. That was an improvement over the previous two quarters, but it’s still far too weak to rapidly lower unemployment.
The government revised down June’s job growth to 188,000 from 195,000 and May’s to 176,000 from 195,000.
Recent data suggest that the economy could strengthen in the second half of the year. A survey Thursday showed, for example, that factories increased production and received a surge of orders in July, propelling the fastest expansion in more than two years.