U.S. Companies Add 71,000 Jobs; Unemployment at 9.5%

Companies in the U.S. added workers in July for a seventh straight month at a pace that suggests the labor-market recovery will be slow to take hold.

Private payrolls that exclude government agencies rose by 71,000 after a June gain of 31,000 that was smaller than previously reported, Labor Department figures in Washington showed today. Economists projected a 90,000 July increase, according to the median estimate in a Bloomberg News survey. Overall employment fell 131,000 and unemployment held at 9.5 percent.

Stock-index futures fell as the report showed an economy that will be slow in recouping the 8.4 million jobs lost since the recession began in December 2007, keeping consumer spending from accelerating. While growth has slowed and Federal Reserve Chairman Ben S. Bernanke has described the outlook as “unusually uncertain,” financial markets have rebounded: the Standard & Poor’s 500 Index last month climbed the most in a year and commodities rallied.

“To the extent that we have a labor market recovery, it’s a slow one,” said Nigel Gault, chief U.S. economist at IHS Global Insight in Lexington, Massachusetts, who projected a gain of 70,000 in private payrolls. “I don’t see anything to indicate that the third quarter will be better.”

Stock-index futures dropped and Treasury securities rose after the report. Futures on the S&P 500 expiring in September declined 0.9 percent to 1,113.5 at 9:14 a.m. in New York. The 10-year Treasury note rose, pushing down the yield to 2.85 percent from 2.9 percent late yesterday.

June Revisions

Total employment fell a revised 221,000 in June, today’s figures showed. Payroll estimates in the Bloomberg survey of 84 economists ranged from a decline of 160,000 to a gain of 10,000 after a previously reported loss of 125,000 jobs in June that was led by census dismissals.

Private employment in July was led by gains in manufacturing and education and health services. Estimates in the Bloomberg survey ranged from increases of 20,000 to 150,000.

“The labor market is holding on and continues to be the foundation for a weak but measurable recovery,” said Ellen Zentner, a senior U.S. macroeconomist at Bank of Tokyo- Mitsubishi UFJ Ltd. in New York, which had forecast 53,000 private payrolls. “The creation in manufacturing jobs was phenomenal and shows that manufacturing continues to be a strong driver of the economy.”

Jobless Rate

Economists surveyed forecast the jobless rate would rise to 9.6 percent last month from 9.5 percent in June. The July unemployment figure reflected a decrease in the size of the labor force.

Joblessness, which reached a 26-year high of 10.1 percent in October, will take time to recede as the number of previously discouraged jobseekers returning to the labor force exceeds the number of available jobs.

The Census Bureau said it let go about 144,000 of the people conducting the decennial population count from mid-June to mid-July. It still had about 200,000 temporary workers on staff as of July 17, indicating additional cuts to come that will keep distorting the payroll figures for months.

For that reason, economists say private payrolls will be a better gauge of the state of the labor market for much of 2010.

Manufacturing payrolls increased by 36,000 in July, more than the survey median of a 13,000 increase and reflecting a 21,000 rise in employment in the motor vehicle and parts industry.

Factory Work

Those factory gains may slacken as the industry leading the U.S. economic expansion cools. A report this week showed manufacturing expanded in July at the slowest pace of the year as orders and production decelerated.

Employment at service-providers fell for a second month. Construction companies cut payrolls by 11,000 after reducing them 21,000 in June. The number of temporary workers decreased by 6,000, the first drop since September.

Average hourly earnings rose 4 cents to $22.59 in July, today’s report showed. The average work week for all workers increased to 34.2 hours in July from 34.1 hours the prior month.

Government payrolls decreased by 202,000. State and local governments employment declined by 48,000, while federal government jobs dropped by 154,000.

The so-called underemployment rate -- which includes part- time workers who’d prefer a full-time position and people who want work but have given up looking -- held at 16.5 percent.

Airlines, Autos

Delta Air Lines Inc. and Ford Motor Co. are among companies adding to payrolls.

Delta, the world’s largest carrier, plans to hire 1,000 workers at its 25 biggest U.S. airports to help with planes that are flying with near-record percentages of seats filled and cope with weather disruptions, Chief Executive Officer Richard Anderson said last month.

Ford, the second-largest U.S. automaker, said this week it plans to add 27 percent more UAW positions at its U.S. plants than originally planned. Ford agreed to add 1,975 jobs, 416 more than it originally intended, by 2012 to do work traditionally done by suppliers. The jobs at nine U.S. plants will be filled by a mix of idled current Ford workers and new hires, Jennifer Flake, a spokeswoman, said in an interview.

United Technologies Corp. said July 26 it expects restructuring actions from the first half of the year to result in job cuts of about 2,400 hourly and salaried employees. The maker of Carrier, Pratt & Whitney and Sikorsky products, had eliminated 900 jobs as of June 30 and is targeting most of the rest of the reductions for 2010 and 2011.

Price Signals

Prices for industrial raw materials are signaling the global economy will avoid falling back into recession, according to Edward Yardeni, president and chief investment strategist at Yardeni Research Inc. in New York.

The Commodity Research Bureau/Reuters index of 13 materials for immediate delivery, which Yardeni last month said was among the best gauges of the economy’s current condition, has climbed 5.8 percent since reaching an almost four-month low on June 7.

Nobel Prize-winning economist Joseph E. Stiglitz said the U.S. still faces an “anemic recovery,” requiring another round of “better designed” stimulus measures from the government.

“The recovery is so weak that it is not strong enough to generate new jobs for the new entrants in the labor force, let alone to find jobs for the 15 million Americans who would like a job and can’t get one.” Stiglitz told Bloomberg Television in an interview in Sydney yesterday.

Fed’s Direction

The jobs report may help determine whether the Fed takes any new measures aimed at boosting growth or sticks to its outlook that the “extended period” of interest rates close to zero and a near-record $2.3 trillion balance sheet will eventually bring down unemployment.

“We have a considerable way to go to achieve a full recovery in our economy,” Bernanke said in a speech this week to southern U.S. state lawmakers in Charleston, South Carolina. Still, “rising demand from households and businesses should help sustain growth,” and consumer spending “seems likely to pick up in coming quarters from its recent modest pace.”

Options outlined by Bernanke last month include enhancing the low-rate commitment, reducing the 0.25 percent rate the Fed pays on banks’ reserve deposits and maintaining or expanding the amount of assets on the balance sheet. The policy-making Federal Open Market Committee next meets on Aug. 10.

The economy, jobs and the budget deficit are likely to be top issues in November elections that will decide control of Congress. Heading into the campaign season, the Obama administration is facing public pessimism about the direction of the economy.

Consumers Views

More than seven in 10 Americans say the economy is still mired in recession, and the country is conflicted over how to balance concerns over joblessness and the federal budget deficit, according to a Bloomberg National Poll.

Americans are torn about whether the federal government should focus on curbing spending or creating jobs, the poll conducted July 9-12 showed. Seven of 10 Americans say reducing unemployment is the priority. At the same time, the public is skeptical of the President Barack Obama’s stimulus program and wary of more spending, with more than half saying the deficit is “dangerously out of control.”

Support for Obama has fallen as the jobless rate has been slow to retreat. His job approval over a three-day period ending July 31 was 44 percent, compared with 54 percent at this time last year, according to a Gallup poll.