Payroll Employment Down 131,000 Due to Census Workers – Private Sector Payrolls Up 71,000

In July, payroll employment fell by 131,000. This followed a downwardly revised decline of 225,000 in June (previously reported to be a drop of 125,000). In both months, the declines were driven by the laying off of temporary Census workers. In July Federal government employment fell by 154,000.

Private sector payrolls continued to grow over the month, but at a meager pace of 71,000. This follows a downwardly revised number of 31,000 in June (previously reported to be a gain of 83,000). In March and April, private sector job growth occurred at a solid pace, averaging about 200,000 per month. Even since, payroll growth has been modest. About 100,000 to 150,000 jobs must be crated each month in order to start to drive down the unemployment rate.

Despite the decrease in payrolls, the unemployment rate, which is measured by a different survey, stayed steady at 9.5%. The constant rate was in part due to a decline in the labor force participation rate, which fell by 0.1 point to 64.6%. The rate has been dropping steadily since April as more workers have likely become discouraged. July’s rate is the lowest since January tying the lowest rate since the economic downturn began. About 1.2 million people left the workforce over the past three months. These people will likely reenter the workforce once sentiment over the labor market improves and this will make it more difficult to drive the unemployment rate down.



10.08.06 (Source: Bureau of Labor Statistics)