• E-mail
• Print
• Comment
• Font Size
• Digg
• del.icio.us
• Discuss article

U.S. Employers Add 207,000 Jobs in July

Posted on: Saturday, 6 August 2005, 00:00 CDT

Aug. 6--U.S. employers added a surprising 207,000 jobs in July, trumping expectations and supporting anecdotal evidence suggesting a healthier labor market.

The U.S. Department of Labor reported that the bulk of the gains came in the retail, health care and leisure sectors, which have seen steady job growth in the last year. The government also revised upward the May and April labor reports to add 42,000 to payrolls.

That brings the tally for the first seven months of 2005 to 1.3 million new jobs, in line with the same period last year. During all of 2004, the economy created an additional 2.2 million jobs.

The July unemployment rate remained steady at 5 percent, which means the labor force has grown.

"Employment is a key gauge of current economic strength, especially for consumers," said Sung Won Sohn, chief executive officer of Hanmi Bank in Los Angeles. "As the economic recovery matures, productivity gains slow, encouraging businesses to hire more people."

Indeed, the jobs tally had recently been coming in under expectations, despite anecdotal evidence of Corporate America's confidence in the economic outlook.

Recent economic indicators had also pointed to a more robust labor market than the jobs statistics were showing, economists said. Jobless claims had dropped to four-week averages not seen since February. Strong auto sales and mortgage activity suggested a resilient consumer.

The Fed's latest Beige Book report also illustrated a solid economic expansion. In the Dallas district, businesses reported stronger activity than statistics seemed to support.

The Texas Workforce Commission last month reported modest additions to payrolls of 12,700 new jobs in June, and economists expect that pace to quicken.

Nationwide, the retail sector added 50,000 new jobs. Eating and drinking establishments increased staffing by 30,000 positions. Health care employment rose by 29,000.

Manufacturing, however, continued to be weak, shedding 4,000 positions last month.

In particularly good news for workers, the Labor Department reported hourly wages were up more than expected over the month by 0.4 percent, the strongest gain in a year. Year-over-year wages are up by 2.7 percent in July, the same rate as June.

The data all bolstered expectations that the Federal Reserve Bank will tighten credit again at its meeting next week to contain inflation. Payrolls account for the bulk of business' cost structure.

Many economists believe the Federal Open Market Committee will increase the key federal funds rate -- what banks charge each other for overnight loans -- from its current perch of 3.25 percent to 3.5 percent.

Others, however, offered a note of caution, while acknowledging the strength of Friday's labor report.

Outplacement firm Challenger, Gray & Christmas reported that in the last three months, employers have announced nearly 300,000 job cuts, an unusually high figure. Layoffs typically taper off this time of year.

"The government report tells us what happened last month, while planned job-cut announcements tend to reveal how companies see business conditions three to six months down the road," said John A. Challenger, the firm's chief executive.

-----

To see more of The Dallas Morning News, or to subscribe to the newspaper, go to http://www.dallasnews.com.

Copyright (c) 2005, The Dallas Morning News

Distributed by Knight Ridder/Tribune Business News.

For information on republishing this content, contact us at (800) 661-2511 (U.S.), (213) 237-4914 (worldwide), fax (213) 237-6515, or e-mail reprints@krtinfo.com.

Source: The Dallas Morning News

More News in this Category