July Scores Solid Job Growth

Job creation cooled a bit in July but still netted 215,000 for the month.

The U.S. economy created a net of 215,000 jobs in July, the Bureau of Labor Statistics reported on Friday. It was a reasonably good, if not stellar performance that might be another data point that the Fed uses to justify a small interest rate increase in September.

The pace of job creation was a little cooler than in June, when a revised 231,000 jobs were created, and considerably cooler than May, with its 260,000 jobs, but still better than several earlier months this year.

Moreover, the July gains were broad-based, with retail trade, health care, professional and technical services, and financial activities all adding positions. The overall U.S. unemployment rate, which is based on a separate BLS survey, didn’t move, and still stands at 5.3 percent, the lowest rate in more than seven years.

So far this year, the economy has created a net of 1.48 million jobs. That’s in line to be somewhat weaker than 2014, when a total of 3.11 million jobs were created, but still more than respectable. It was only five years ago, after all, when barely 1 million new jobs were created during all of 2010, following the vast loss of over 5 million jobs in 2009.  The July 2015 total was almost exactly in line with the average number of jobs created each month this year, which is a bit more than 211,000. That’s a steady rate of increase, and arguably more sustainable than during late 2014, when the rate topped 300,000 one month and 400,000 another.

The U-6 is getting better as well. Every time that it’s noted that the headline unemployment rate is whatever it is, too-smart by half observers inevitably point out that that isn’t the “real” unemployment rate, since it doesn’t count people who are too discouraged to look for work, or people who are trapped in part-time employment, but want something better, namely a full-time job. The BLS, of course, does track that broader definition of unemployment (“alternate measures of labor underutilization,” the number-crunchers at the bureau call it, or the U-6; the headline number is U-3), and it’s been improving as consistently as the headline number. In the July, the U-6 came in at 10.4 percent. A year ago, it was 12.2 percent.

Another long-standing employment problem is also slowly— very slowly—going away. In July, the number of long-term unemployed (those jobless for 27 weeks or more) came in at 2.2 million. These individuals accounted for 26.9 percent of the unemployed, and tend to be those for whom finding work is the most difficult, though they’re still looking for work, and so they’re counted among the unemployment. Over the past 12 months, the number of long-term unemployed went down by a net of 986,000.

The ameliorization of long-term employment is especially good for residential real estate, since workers out of the workforce so long tend to double up or otherwise form fewer households (leading to the familiar stereotype of Millennials bunking in their parents’ basement). As this problem eases, more households are formed.