BREAKING: U.S. Created 1.76 Million Jobs in July, vs 1.60M Expected
By Geoffrey Smith
Investing.com -- The U.S. economy's recovery from lockdown faltered in July, creating only 1.763 million jobs through the middle of the month, according to government data released on Friday.
Nonfarm payrolls rose by 1.763 million, according to the Bureau of Labor Statistics, down from a revised 4.791 million in the month through mid-June. A broad range of forecasts ahead of the report had generated an average estimate of 1.60 million jobs created.
With the headline number falling relatively close to the average forecast, the initial impact on markets was small. The US 500 Futures contract, which has been zeroing in on a new record high this week, edged only 4 points higher, less than 0.1%, on the news. The euro pared earlier losses, rising a quarter of a cent to $1.1840 by 8:45 AM ET (1245 GMT), but still well within the day's trading range.
Marc Chandler, managing director of Bannockburn Global Forex, said the dollar had needed a "much stronger" number to turn market sentiment which has been solidly against it this week, driving the dollar index to a series of two-year lows.
The unemployment rate fell to 10.2% of the working population, from 11.1% in June. That's below a consensus forecast of 10.5%.
The softening of the labor market was in part due to the second wave of coronavirus infections that spread through the South and West of the U.S. during the month, leading states such as California, Texas, and Florida to pause and even reverse some of the measures they had previously announced to reopen their economies.
The still-high number of unemployed - figures released on Thursday showed over 31 million Americans claiming either statutory unemployment benefits or the Pandemic Unemployment Assistance benefits in the week through July 25 - has gained in importance since the Congressional approval for enhanced unemployment benefits expired at the end of July. Negotiators from the Republican-led Senate and the Democrat-led House of Representatives have been unable so far to agree on a compromise that would extend the benefits. Analysts warn that failure to extend would result in a sharp drop in household consumption.
"Total employment remains 13 million down on February level," said Panmure Gordon chief economist Simon French via Twitter. He pointed out that the broader 'U6' classification of unemployed and underemployed was still running at over 17% of the workforce.
The government's data meanwhile also showed a fresh decline in the labor force participation rate to 61.4% from 61.5% in June. That suggests that more Americans have stopped actively looking for work given the lack of opportunities since the coronavirus epidemic exploded. The participation rate had hit a multi-year high of 63.4% in February and dropped to a low of 60.2% in April.
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