July Jobs Report Less Stellar Than June's, But Still Strong
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The U.S. economy continued to add jobs at a steady pace in July. For the sixth straight month, employers added more than 200,000 jobs to their payrolls. The government's monthly employment report did show the unemployment rate ticking up slightly to 6.2 percent. But as NPR's John Ydstie reports, even that was a somewhat positive sign.
JOHN YDSTIE, BYLINE: The number of jobs added in July - 209,000 - was less than the nearly 300,000 added in June. But Doug Handler, chief U.S. economist at IHS Global Insight, says it's a very good report.
DOUG HANDLER: Not quite as good as the blockbuster in June, but it's fully adequate and consistent with an economy that's growing at a moderate pace.
YDSTIE: As for the one-tenth of a percent rise of the unemployment rate, Handler says the rate went up for a good reason.
HANDLER: More people were entering the labor force. The labor force's participation rate actually ticked up a bit. The economy is strong enough to bring people back into the labor force looking for jobs, so that's a good thing
YDSTIE: There have been several other positive economic reporting this week, including a four percent annual growth rate for the second quarter and a jump in a measure of employee compensation. Those reports had some analysts concerned that the economy wasn't proving fast enough - that the fed might start raising interest rates sooner than expected. Those concerns help spark a selloff in the stock market yesterday. Doug Handler thinks this report should ease those concerns.
HANDLER: There's no real new news or new change conditions in conditions, really, for the fed to act on based on the data here.
YDSTIE: Dean Baker, co-director for the Center for Economic and Policy Research, agrees. He says the strong growth rate for the second quarter overstates the economy's strengths.
DEAN BAKER: People are looking at the four percent growth in the second quarter, and that's, of course, pretty strong growth. But again, you can't look at that in isolation. You have to remember that the economy shrank 2.1 percent in first quarter.
YDSTIE: That means the average growth rate for the first half of this year was closer to one percent. Also, Baker says, inflation remains low which justifies the fed keeping rates low.
BAKER: I just don't see any basis for concern about inflation. Again, the reason why you'd look to raise interest rates is you think inflation is going to be a problem, and it's not even on the horizon at this point.
YDSTIE: Baker argues the economy actually needs to grow faster to create more jobs. John Ydstie, NPR News, Washington. Transcript provided by NPR, Copyright NPR.