The U.S. labor market showed a slight improvement in July, if only in comparison to the very dismal June numbers.
The closely-watched figure for non-farm payroll employment showed a gain of 117,000 jobs. Private sector jobs increased across a broad range of sectors, but those gains were offset by continued declines in the state and local governments, which lost 37,000 jobs in the month. There was some good news in the form of an upward revision of very weak preliminary numbers reported earlier for May and June. May job gains were revised upward from 25,000 to 53,000 and June from 18,000 to 46,000.
A separate household survey that includes farm jobs and self-employed showed a loss of 38,000 jobs for the month, along with a decrease in unemployment (by 156,000), and in the size of the labor force (by 196,000). Because the unemployment rate is calculated as the ratio of unemployed persons to the labor force, the paradoxical result was that the unemployment rate fell (from 9.2 to 9.1) despite the decrease in employment. Because the decrease in the unemployment rate was largely the result of the exit of discouraged workers from the labor force, it is really more of a negative than a positive development.
The Labor Department also publishes a broader measure of unemployment, called U-6, which is based on the sum of officially unemployed persons, plus marginally attached persons who would like to work but are not looking for work because they think there are no jobs, plus persons who are working part time but would prefer full-time work. That measure also fell in July, from 16.2 percent to 1.1 percent.
An even broader labor market indicator is the employment to population ratio. It fell to 58.1 percent in July, and all-time low.
Follow this link to view or download a set of classroom-ready slides with charts showing the evolution of the labor market situation.