The U.S. economy unexpectedly lost 44,000 jobs in July for a sixth straight decline, the government reported. The unemployment rate dropped to 6.2 percent as discouraged job-seekers left the work force.
Payrolls declined after a revised 72,000 drop in June, more than twice the number originally reported, the Labor Department said in Washington. The jobless rate fell from 6.4 percent, the highest since April 1994. Manufacturers led the job losses with 71,000, completing a third year of monthly declines.
About a million jobs have been lost since the recession ended and the recovery began in November 2001, with Eastman Kodak Co. and Boeing Co. among the companies announcing job cuts last month. The economy, which expanded at a greater than expected 2.4 percent pace last quarter, needs to grow faster than 3 percent to start adding jobs, economists said.
``Firms are reluctant to hire and the labor market is going to lag overall growth,'' said Robert Mellman, an economist at J.P. Morgan Securities Inc. in New York who had forecast payrolls would drop by 50,000. ``We look for the labor market to gradually improve over the next few months, but I would emphasize the word gradual.'' J.P. Morgan yesterday raised its third-quarter growth forecast by a half-point to 4.5 percent.
The jobs report overshadowed a separate release showing that consumer spending, which accounts for 70 percent of the economy, rose in June for a fourth consecutive month. The 0.3 percent rise in spending followed a revised 0.4 percent increase in the previous month, the Commerce Department said. Incomes gained 0.3 percent for a second straight month.
Discouraged Workers
The unemployment rate dropped as the civilian labor force fell by 556,000 workers from June. Poor job prospects caused more people to stop looking for work, as the report identified 470,000 discouraged workers last month, compared with 405,000 in July 2002.
President George W. Bush, who won a tax cut from Congress in May that he said will encourage job growth, is holding a Cabinet meeting today focused on the economy.
``The president will not be satisfied until everyone who wants work can find a job,'' White House spokesman Scott McClellan said after a report yesterday showed a greater-than- expected 2.4 percent increase in gross domestic product.
Economists had expected payrolls to rise by 10,000 last month following a previously reported decrease of 30,000 in June, according to the median of 67 forecasts in a Bloomberg News survey. They projected the unemployment rate would fall a tenth of a percentage point to 6.3 percent.
`Tarnished'
``Even the apparent bright spot, the drop in the unemployment rate, is tarnished by the fact that the bulk of the improvement was in part-time jobs, and there was another increase in the number of part timers who could not find full-time jobs,'' said Christopher Low, chief economist at FTN Financial in New York. ``The message is clear: Despite stronger growth in the second quarter, growth is still not strong enough to pick up the slack in the job market.''
The benchmark Treasury security due in May 2013 fell 1 point, pushing its yield up 13 basis points to 4.54 percent at 9:01 a.m. in New York. Standard & Poor's 500 Index futures expiring in September fell 3.3 to 986.
The household survey, which is used to calculate the unemployment rate and is derived from a separate telephone survey of 60,000 homes, showed a 260,000 decrease in employment. Some economists say rising employment in the household survey is a leading indicator of the strength of the labor market.
Productivity Gains
Gains in employment are important to the recovery because jobs boost incomes and encourage consumer spending, which accounts for two-thirds of growth.
Because companies are boosting productivity, or producing more with less, there's less of a need to hire until economic growth strengthens. ``We're learning to do things with fewer people,'' said Brad Anderson, chief executive officer at Best Buy Co., the largest U.S. electronics retailer, in an interview.
Manufacturing jobs continued to evaporate. Since reaching a peak in July 2000, factory employment has fallen by more than 2.6 million to 14.7 million.
``We'll start hiring again when we see a pickup in capital spending,'' said Dennis Letham, chief financial officer at Anixter International Inc., in an interview. Anixter, based in Glenview, Illinois, distributes more than 185,000 communications and specialty wire and cable products in 40 countries.
The factory workweek dropped to 40.1 hours from 40.3 hours and overtime held at 4 hours.
Boeing Co., the world's largest maker of airplanes, announced last month that it will cut 4,000 to 5,000 more jobs this year because of slow demand. About 660 workers received layoff notices in July. At least 40,000 positions will have been eliminated since the 2001 terrorist attacks.
Service Industries
Employment in service-producing industries, which include banks and government agencies, rose 23,000 for the first increase in three months. The increase was led by professional and business services, which includes temporary-help agencies. Employment at the agencies rose 41,900, the third straight monthly gain. Retail employment fell 14,300.
``Businesses remain hesitant to pursue their expansion plans,'' said Carl Camden, president of Kelly Services Inc., the second-largest U.S. temporary-employment company. ``While there has been some encouraging economic news recently, we have not yet seen the aggressive hiring that is characteristic of an improving economy.''
Government employment dropped by 10,000 in July. That may have been restrained in July as some states and municipalities struggle with deficits, according to Lehman Brothers economists.
Work Hours Decline
There have been some recent signs that employment may rebound.
The volume of help-wanted advertising in major U.S. newspapers rose in June from the lowest reading since September 1961. Weekly first-time claims for unemployment benefits fell to 388,000 last week, the second straight week under 400,000.
Average weekly hours worked for all employees dropped to 33.6 hours from 33.7. Economists had expected hours would rise to 33.8 hours, according to the Bloomberg News survey.
The decline in average hours worked was ``the GDP equivalent of losing 350,000 payroll jobs and a sign that the labor market, despite the recent improvement in claims, is likely to remain weak,'' said Drew Matus, senior U.S. economist at Lehman Brothers Inc.
International Business Machines Corp., the world's largest computer maker, said last month it plans to cut the hours of 2,700 manufacturing workers at a chip-making plant near Burlington, Vermont, to save money and avoid layoffs. The company will reduce the number of hours that employees work in a two-week period to 72 hours from 84 hours.
Worker Incomes
Incomes increased last month. Workers' average hourly earnings rose 0.3 percent, or 5 cents. Economists had expected a 0.2 percent increase in hourly wages. Average weekly earnings increased to $518.78 last month from $518.64 in June.
Among blacks, the unemployment rate fell to 11.1 percent from 11.8 percent in June. The jobless rate for Hispanics decreased to 8.2 percent from 8.4 percent, while the rate for whites held at 5.5 percent.
For teenagers, unemployment fell to 18.4 percent last month from 19.3 percent. The jobless rate for women held at 5.2 percent while the rate for men decreased to 5.9 percent from 6.1 percent.
Payrolls declined after a revised 72,000 drop in June, more than twice the number originally reported, the Labor Department said in Washington. The jobless rate fell from 6.4 percent, the highest since April 1994. Manufacturers led the job losses with 71,000, completing a third year of monthly declines.
About a million jobs have been lost since the recession ended and the recovery began in November 2001, with Eastman Kodak Co. and Boeing Co. among the companies announcing job cuts last month. The economy, which expanded at a greater than expected 2.4 percent pace last quarter, needs to grow faster than 3 percent to start adding jobs, economists said.
``Firms are reluctant to hire and the labor market is going to lag overall growth,'' said Robert Mellman, an economist at J.P. Morgan Securities Inc. in New York who had forecast payrolls would drop by 50,000. ``We look for the labor market to gradually improve over the next few months, but I would emphasize the word gradual.'' J.P. Morgan yesterday raised its third-quarter growth forecast by a half-point to 4.5 percent.
The jobs report overshadowed a separate release showing that consumer spending, which accounts for 70 percent of the economy, rose in June for a fourth consecutive month. The 0.3 percent rise in spending followed a revised 0.4 percent increase in the previous month, the Commerce Department said. Incomes gained 0.3 percent for a second straight month.
Discouraged Workers
The unemployment rate dropped as the civilian labor force fell by 556,000 workers from June. Poor job prospects caused more people to stop looking for work, as the report identified 470,000 discouraged workers last month, compared with 405,000 in July 2002.
President George W. Bush, who won a tax cut from Congress in May that he said will encourage job growth, is holding a Cabinet meeting today focused on the economy.
``The president will not be satisfied until everyone who wants work can find a job,'' White House spokesman Scott McClellan said after a report yesterday showed a greater-than- expected 2.4 percent increase in gross domestic product.
Economists had expected payrolls to rise by 10,000 last month following a previously reported decrease of 30,000 in June, according to the median of 67 forecasts in a Bloomberg News survey. They projected the unemployment rate would fall a tenth of a percentage point to 6.3 percent.
`Tarnished'
``Even the apparent bright spot, the drop in the unemployment rate, is tarnished by the fact that the bulk of the improvement was in part-time jobs, and there was another increase in the number of part timers who could not find full-time jobs,'' said Christopher Low, chief economist at FTN Financial in New York. ``The message is clear: Despite stronger growth in the second quarter, growth is still not strong enough to pick up the slack in the job market.''
The benchmark Treasury security due in May 2013 fell 1 point, pushing its yield up 13 basis points to 4.54 percent at 9:01 a.m. in New York. Standard & Poor's 500 Index futures expiring in September fell 3.3 to 986.
The household survey, which is used to calculate the unemployment rate and is derived from a separate telephone survey of 60,000 homes, showed a 260,000 decrease in employment. Some economists say rising employment in the household survey is a leading indicator of the strength of the labor market.
Productivity Gains
Gains in employment are important to the recovery because jobs boost incomes and encourage consumer spending, which accounts for two-thirds of growth.
Because companies are boosting productivity, or producing more with less, there's less of a need to hire until economic growth strengthens. ``We're learning to do things with fewer people,'' said Brad Anderson, chief executive officer at Best Buy Co., the largest U.S. electronics retailer, in an interview.
Manufacturing jobs continued to evaporate. Since reaching a peak in July 2000, factory employment has fallen by more than 2.6 million to 14.7 million.
``We'll start hiring again when we see a pickup in capital spending,'' said Dennis Letham, chief financial officer at Anixter International Inc., in an interview. Anixter, based in Glenview, Illinois, distributes more than 185,000 communications and specialty wire and cable products in 40 countries.
The factory workweek dropped to 40.1 hours from 40.3 hours and overtime held at 4 hours.
Boeing Co., the world's largest maker of airplanes, announced last month that it will cut 4,000 to 5,000 more jobs this year because of slow demand. About 660 workers received layoff notices in July. At least 40,000 positions will have been eliminated since the 2001 terrorist attacks.
Service Industries
Employment in service-producing industries, which include banks and government agencies, rose 23,000 for the first increase in three months. The increase was led by professional and business services, which includes temporary-help agencies. Employment at the agencies rose 41,900, the third straight monthly gain. Retail employment fell 14,300.
``Businesses remain hesitant to pursue their expansion plans,'' said Carl Camden, president of Kelly Services Inc., the second-largest U.S. temporary-employment company. ``While there has been some encouraging economic news recently, we have not yet seen the aggressive hiring that is characteristic of an improving economy.''
Government employment dropped by 10,000 in July. That may have been restrained in July as some states and municipalities struggle with deficits, according to Lehman Brothers economists.
Work Hours Decline
There have been some recent signs that employment may rebound.
The volume of help-wanted advertising in major U.S. newspapers rose in June from the lowest reading since September 1961. Weekly first-time claims for unemployment benefits fell to 388,000 last week, the second straight week under 400,000.
Average weekly hours worked for all employees dropped to 33.6 hours from 33.7. Economists had expected hours would rise to 33.8 hours, according to the Bloomberg News survey.
The decline in average hours worked was ``the GDP equivalent of losing 350,000 payroll jobs and a sign that the labor market, despite the recent improvement in claims, is likely to remain weak,'' said Drew Matus, senior U.S. economist at Lehman Brothers Inc.
International Business Machines Corp., the world's largest computer maker, said last month it plans to cut the hours of 2,700 manufacturing workers at a chip-making plant near Burlington, Vermont, to save money and avoid layoffs. The company will reduce the number of hours that employees work in a two-week period to 72 hours from 84 hours.
Worker Incomes
Incomes increased last month. Workers' average hourly earnings rose 0.3 percent, or 5 cents. Economists had expected a 0.2 percent increase in hourly wages. Average weekly earnings increased to $518.78 last month from $518.64 in June.
Among blacks, the unemployment rate fell to 11.1 percent from 11.8 percent in June. The jobless rate for Hispanics decreased to 8.2 percent from 8.4 percent, while the rate for whites held at 5.5 percent.
For teenagers, unemployment fell to 18.4 percent last month from 19.3 percent. The jobless rate for women held at 5.2 percent while the rate for men decreased to 5.9 percent from 6.1 percent.
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