Economy Watch: Jobs Market Posts Healthy Gain; Construction Spending Slips

The unemployment rate for July was 6.2 percent, up slightly from June but down from 7.3 percent one year ago. Likewise, construction spending declined 1.8 percent from May to June but was up 5.5 percent year over year.

Jobs gains in July, while not quite as robust as in June, were nevertheless broad-based. Professional and business services added 47,000 jobs during the month, including gains in architectural and engineering services. Manufacturing added 28,000 jobs in July, a good chunk of them—15,000–in motor vehicles and parts.

In July retail trade employment rose by 27,000. Automobile dealers, food and beverage stores, and general merchandise stores all hired more people. Employment in construction increased by 22,000 during the month, and despite the relative sluggishness of the residential sector, jobs in residential building and in residential specialty trade contractors increased.

The number of long-term unemployed people (those who have been jobless for at least 27 weeks) was more or less unchanged in July at 3.2 million. They accounted for 32.9 percent of the total unemployed. Over the past 12 months, the number of long-term unemployed has declined by 1.1 million, according to the Bureau of Labor Statistics.

The July headline unemployment rate was 6.2 percent, up a tenth of a percent from June, which probably indicates that more people are now actively looking for work than before. By comparison, the headline rate one year ago was 7.3 percent. The BLS’s U-6 metric, which counts not only the officially unemployed, but those who have looked for work unsuccessfully in the last 12 months, along with part-time workers who want to work full time, came in at 12.2 percent in July, also a tenth of a percent higher compared to the previous month. A year ago, the U-6 was 13.9 percent.

Construction Spending Ticks Down in July

The Census Bureau reported on Friday that construction spending during June 2014 reached an annualized rate of $950.2 billion, 1.8 percent below May’s estimate. But the June 2014 figure is 5.5 percent higher than the total for June 2013.

Altogether, spending on private construction slipped 1 percent month over month, while public construction spending declined 4 percent. Residential construction was down 0.2 percent from May, but up 7.1 percent since May 2013. Nonresidential construction dropped 2.8 percent for the month, but rose 4.6 percent year over year.

New multifamily construction was one of the few categories to rise in June, up 2.5 percent (and 33.2 percent since last year, but the property type is volatile). Amusement and recreation construction gained 2.1 percent for the month, and 3.1 percent since last year. Other categories that eked out small gains (less than 1 percent) month over month were office, health care, and religious structures.

The employment numbers failed to impress investors on Friday, with the Dow Jones Industrial Average losing 69.93 points, or 0.42 percent. The S&P 500 was off 0.29 percent and the Nasdaq declined 0.39 percent.