August 6, 2004

Unemployment Numbers Come Out Today

WASHINGTON - The Labor Department announces the unemployment figures for July at 8:30 a.m. EDT this morning. Economists are hopeful that job creation picked up. They are forecasting payrolls to grow by around 247,000, which would mark an improvement from the disappointing 112,000 jobs added in June. The unemployment rate is expected to hold steady at 5.6 percent.

June's payroll increase was the 10th straight month of gains. But analysts had forecast a rise of at least 250,000 in payroll employment.

The Labor Department reported Thursday that new applications for jobless benefits declined by a seasonally adjusted 11,000 to 336,000 for the week ending July 31. That was the lowest since the beginning of July and slightly better than some analysts had expected. They were forecasting claims in the range of 340,000 for last week.

New claims have bounced up and down recently. Much of that volatility is associated with the temporary shutdowns at auto plants each year so they can retool for new models. Even so, the long-term trend in claims shows improvement. A year ago claims stood at 399,000.

Separately, many retailers reported lackluster sales gains in July, particularly mall-based apparel chains such as Gap. Analysts attributed the disappointing sales to higher gasoline prices, which made some people more cautious spenders, and other factors.

Wal-Mart and some other discounters had solid gains. Some high-end stores such as Neiman Marcus also did well.

The jobless claims report also showed the number of workers continuing to draw unemployment benefits declined by 35,000 to 2.91 million for the week ending July 24, the most recent period for which that information is available. A year ago, that figure was 3.62 million.

While the economic recovery is on a solid path, the labor market recovery has been spotty.

The jobs climate has figured prominently in the presidential campaign, with President Bush and his Democratic rival, John Kerry, offering vastly different assessments on the nation's economic health.

"Making sure that more jobs are created has ... been the top domestic priority of President Bush's administration," Treasury Secretary John Snow said in a visit Thursday to Akron, Ohio.

Federal Reserve Chairman Alan Greenspan, appearing before Congress last month, noted that although businesses have not completely let go of their caution, he expected hiring to improve in the months ahead.

Still, with the job situation uneven, Federal Reserve policy-makers have leeway to raise short-term interest rates gradually to head off any inflation problems, economists say. The Fed meets next week; economists expect policy-makers to boost rates by one-quarter percentage point. On June 30, the Fed increased interest rates for the first time in four years, raising a key rate to 1.25 percent from a 46-year low of 1 percent.

In addition to June's sluggish jobs-growth figures, other economic reports, including ones on retail sales and industrial production, suggested the economy hit a pothole in June.

The economy slowed in the April-to-June quarter, growing at an annual rate of 3 percent, down from 4.5 percent in the previous three months. Analysts, however, continue to believe the economy will pick up speed in the current quarter.