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Employment growth surprisingly weak in july { August 6 2004 } Original Source Link: (May no longer be active)
http://www.nytimes.com/2004/08/06/business/06CND-ECON.html?hphttp://www.nytimes.com/2004/08/06/business/06CND-ECON.html?hp
August 6, 2004
U.S. Employment Growth Surprisingly Weak in July
By DAVID LEONHARDT
Job growth ground nearly to a halt last month, the Labor Department reported this morning, in a clear sign that the economy has weakened in recent months.
Employers added just 32,000 jobs in July, a small fraction of what forecasters had expected and the smallest gain this year. The government also announced that job growth in May and June was less than initially estimated.
"It's clear that the economy is hitting a soft patch," said Richard J. DeKaser, chief economist at the National City Corporation, a bank based in Cleveland. "What we're seeing is the severe impact of high oil prices."
The unemployment rate fell slightly, to 5.5 percent, last month. It is based on a smaller survey than the job growth numbers, which are widely considered the more reliable gauge of employment.
Stocks fell broadly after the release of the jobs report, with the Standard & Poor's 500 index down almost 1 percent at 10 a.m. in New York. The dollar dropped against the euro, and interest rates declined too, although economists continue to expect the Federal Reserve to raise its benchmark short-term rate next week.
After a surge of job growth this spring had brought an end to a three-year hiring slump, the disappointed numbers of the last two months have raised new worries about the economy's health and created a potential political problem for President Bush. Mr. Bush pointed to the strong job gains earlier this year as a result of tax cuts he had championed, but Democrats said today that the new figures showed that most Americans still were not benefiting.
"It's premature for George Bush to raise the banner of `Mission Accomplished' above the economy," said Representative Rahm Emanual, Democrat of Illinois. "If you're in the middle class, the economy has not turned the corner."
Mr. Bush is speaking to a conference of journalists in Washington this morning, and spokespeople at the White House and in his campaign did not immediately respond to requests for comment.
The hiring slowdown occurred across most industries in July. Retail employment fell for the first time since December, according to the Labor Department, which adjusts its statistics to smooth over normal seasonal changes. Banks, hotels, movie studios and phone companies all reduced their workforces too. Government employment remained flat, as it essentially has for the last few months.
For the first time year, more industries cut jobs than added them, the government reported.
Joshua Shapiro, an economist at MFR Incorporated, a consulting firm in New York, called the report "terribly disappointing" in a letter to clients. Goldman Sachs said, "Obviously, these numbers are extremely weak and represent a big surprise."
Helping to make up for the losses, manufacturers added 10,000 jobs, just the fifth positive month for the sector since the summer of 2000. Hospitals and other health-care companies continued their long rise in employment, meanwhile, and construction companies added jobs as well.
The best sign in an otherwise grim report may have been the gain in earnings for rank-and-file workers, who make up about 80 percent of the workforce. Their average weekly pay rose $3.25, to $529.09, after dropping last month.
Over the last 12 months, though, weekly pay has risen only 2.4 percent — considerably less than inflation, which has been running above 3 percent.
As part of its regular revisions, the Labor Department said that the economy added 283,000 jobs in May and June. The previous estimate was a gain was 347,000 jobs.
Copyright 2004 The New York Times Company
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