Defying expectations, the U.S. economy added 163,000 jobs in July, according to a Labor Department report released Friday. Most analysts had predicted monthly growth of just 100,000 jobs, but surprising growth in the education and health services sectors — which lost jobs in June, but gained 38,000 jobs in July — helped tip the balance. Meanwhile, manufacturing added 25,000 posts, and professional and business services added 49,000. Still, the unemployment rate crept up to 8.3 percent. A closer look at what the numbers mean:
1. The July numbers are the best in months
Last month's gains are the best since February, when the economy added a whopping 240,000 jobs. The July stats also break a somewhat dismal three-month streak in which the economy added only about 75,000 jobs per month.
2. But overall, the U.S. economy is still stagnant
Step back from July's gains, look at the first seven months of the year, and you'll see that the economy has only added about 151,000 jobs a month on average, on par with last year's sluggish pace. That's "enough to keep up with population growth," says Christopher S. Rugaber of The Associated Press, "but not enough to drive down the unemployment rate." Remember, 12.8 million Americans are still unemployed.
3. The unemployment rate keeps ticking up
The much-watched jobless rate, which had steadily fallen to 8.1 percent in April — the lowest rate since January 2009 — is climbing again. The unemployment rate hit 8.2 percent in May and June, and in July, it jumped to 8.3 percent. Why is it inching up despite solid job gains? Mostly, says Phil Izzo at The Wall Street Journal, "because the two numbers come from separate reports. The number of jobs added — the 163,000 figure — comes from a survey of business, while the unemployment rate comes from a survey of U.S. households. The two reports often move in tandem, but can move in opposite directions."
4. The Federal Reserve may be forced to act
Earlier this week, the Federal Reserve declined to take any new steps to help the struggling economy, saying only that it would "closely monitor" the situation, and provide assistance "as needed." But "should the recovery remain weak," say Jeffrey Sparshott and Tom Barkley at The Wall Street Journal, the Fed looks "poised to launch a new round of stimulus." By the time the board meets again in September, it will have two more jobs reports — July and August — to ponder when deciding its next move.
5. This gives the GOP ammo to fire at Obama
While the 163,000-jobs figure would seem to be good for President Obama's re-election effort, "the unemployment rate has been above 8 percent since his first month in office," says Rugaber. That's the longest stretch on record, and no president since World War II has successfully faced re-election with an unemployment rate over 8 percent. GOP presidential candidate Mitt Romney responded swiftly to Friday's report, calling the 0.1 percent increase in the unemployment rate a "hammer blow" to the middle class.
Sources: Associated Press (2), Bloomberg, Bureau of Labor Statistics, Los Angeles Times, The New York Times (2), The Wall Street Journal (2)
