July job growth disappoints, but Dow sets new high

The economy adds 162,000 jobs in July, less than expected. The jobless rate drops to 7.4%, the lowest in 4 1/2 years. Stocks slide at first but surge at the close.

By Charley Blaine Aug 2, 2013 10:33AM

Staff graphicUpdated: 5:50 p.m. ET.


Investors may not have been wild about Friday's jobs report, but they still like stocks. After dropping at the open, the stock market slowly climbed back, and the major averages ended the day in the black. 


The Dow Jones industrials ($INDU) finished higher for a sixth straight week, and Facebook (FB) finally closed above its $38 IPO price.


There was reason not to like the Labor Department report. Job growth in July was less robust than expected.

The national  unemployment rate, however, fell to 7.4%, the lowest since 7.3% in December 2008.


The economy added 162,000 jobs in July, less than the consensus estimate of 184,000 job gains. There had been talk the gains might have been as many as 200,000. Private-sector growth was 161,000 jobs, down from 196,000 in June  and 187,000 in May.

Moreover, the Labor Department trimmed reported job gains in June and May by a total of 26,000.

Graphic: The recovery so far, by the numbers

 

The economy added 162,000 jobs in July, less than the consensus estimate of 184,000 job gains. There had been talk the gains might have been as many as 200,000. Private-sector growth was 161,000 jobs, down from 196,000 in June  and 187,000 in May.

Moreover, the Labor Department trimmed reported job gains in June and May by a total of 26,000. The 7.4% unemployment rate was down from 7.6% in May and June and from 8% in July 2012.


Investors started the day hating the report, but bargain hunters came into the market in the afternoon. Down about 69 points right after the open, the Dow finished up 30 points to 15,658.


The Standard & Poor's 500 Index ($INX) gained 3 points to 1,710, its fifth gain in six weeks. Meanwhile, the Nasdaq Composite Index ($COMPX) had gained 14 points to 3,690, mostly because of gains for Apple (AAPL), Viacom (VIAB) and Qualcomm (QCOM). 


The Dow and S&P 500 set new closing highs.  The Nasdaq's close was its best since Sept. 28, 2000.


More slow job growth

The government's report showed job growth, but slow growth. Jobs have been growing at between 170,000 and 190,000 a month over the last 20 months, and the economy has gained some 6.7 million jobs since job losses bottomed in February 2010.


Payroll employment is still down some 2 million from the high of 138.1 million jobs in January 2008. One can argue the reasons for the slow recovery. The biggest reasons probably are the slow recovery in the financial sector, the excruciatingly slow recovery in construction and modest jobs gains in the automobile and automotive parts manufacturing.


The auto sector lost 53% of its jobs between June 2000 and June 2009. Automakers have been expanding in the last few years, and jobs have grown 31% since the 2009 bottom. But employment in the sector is still off 515,600, or 38.7% from June 2000 level.


Meanwhile, wage growth continues to be stagnant. In fact, the average hourly private-sector wage fell 2 cents to $23.98 an hour after rising 10 cents to $24 in June. The gain from a year ago: 44 cents an hour, or 1.9%. 


The details of the report included other disappointments: Average weekly hours worked dipped to 34.4 from 34.5. Even temporary employment growth was lower: 8,000 after a gain of 16,000 in June.

Construction employment fell by 6,000, and analysts suggested it might be due to the increase in interest rates. Manufacturing added 6,000 jobs after small declines in the prior four months. 


A disappointment and a worry in the report, according to a note from Douglas Handler, chief U.S. economist at IHS Global Insight: The labor force of workers 25 and older who have a bachelor's degree or higher dropped by 293,000, and the number of workers employed fell by 256,000.


It's not clear if this is a blip or something more serious, he said in an interview. The workforce  started to slip in May. The number of employed started to slip in June.


It's possible that some older, educated workers are getting laid off and can't find similar jobs, Handler said. There isn't data yet to say who exactly these people are. But Handler guesses the group would include executive assistants, clerks, bank tellers and telephone operators. 


What will the Fed do?

A big question from the report was if it might change the expectation that the Federal Reserve would decide in September to trim its $85-billion-a-month bond buying program, designed to stimulate the economy. Many analysts believe the Fed will vote at its September meeting to start the process.

But it will also maintain its policy of keeping its federal funds target at 0% to 0.25%? The federal funds rate is the rate banks charge each other for overnight loans. It is the foundation for just about all U.S. interest rates.

While the payroll report is what investors and traders watch most closely, the household numbers tell a slightly different and somewhat better story. Those statistics put employment gains at 227,000, but the size of the workforce fell by 37,000. That was enough to pull the unemployment rate down to 7.4%.

A measure of unemployment that takes in the unemployed -- people who are working part-time because they can't find full-time work and those who have stopped looking for work -- was 14%, down from 14.3% in June and 15% in July 2012.


Interest rates, gold, crude oil fall

The report was soft enough that interest rates moved lower. The 10-year Treasury yield fell to 2.60% from Thursday's 2.72%. Crude oil (-CL) in New York was off $1.14 to $106.75 a barrel just before Friday's close. Brent crude, the North Sea benchmark that heavily influences retail gasoline prices in the United States, was off 73 cents to $108.81. 


The national average retail price of gasoline was $3.626 a gallon, down from $3.63 a gallon on Thursday, according to AAA's Daily Fuel Gauge Report. The price was down 0.6% from a week ago.


Gold (-GC) fell to as low as $1,282.40 an ounce before the jobs report came out. The idea that the Fed might not start to taper its bond buying in September pushed prices back above $1,300. The metal settled down 70 cents to $1,310.50 an ounce. For the week, gold was down 0.8% and is down 21.8% on the year.


Facebook and the market move up

Facebook jumped to as high as $38.49 in the morning, then faded below $38. And after a volatile afternoon, it rose with the market, ending at $38.05. The shares went public at $38 on May 17, 2012. The IPO process was botched, however, and the company had a hard time explaining how it would make a profit from its mobile users.


In its second-quarter report , it convinced investors there's plenty of money to be made from mobile, and the stock has climbed 43.5% since its July 24 earnings report. If you had been really smart and bought the shares at their low of $17.55 on Sept. 4, 2012, you'd be ahead 117%.


Eighteen of the 30 Dow stocks were higher, led by Hewlett-Packard (HPQ), up 77 cents to $27 in part on talk that Carl Icahn had bought a stake in the company. CNBC said sources denied the rumor. Chevron (CVX) was a laggard, down $1.49 to $124.95 after reporting disappointing second-quarter results. 


Meanwhile, 259 S&P 500 stocks were higher, led by Sealed Air (SEE), Mylan (MYL) and Viacom (VIA.B).


In addition, 52 stocks in the Nasdaq-100 Index ($NDX) were higher, with Apple, Qualcomm, Viacom and Microsoft (MSFT) contributing nearly 11 points of the 17-point gain for the index to 3,144. (Microsoft owns and publishes Top Stocks, an MSN Money site.)


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69Comments
Aug 2, 2013 11:08AM
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Full time jobs are history in the US.  There is a loop hole in Obamacare where employers are off the hook and don't have to pay the Obamacare penalty for not providing health insurance to employees as long as employees work 30 hours per week or less. Now ex-full time workers are looking for another part time job.

 

What this article fails to mention is any job growth or new jobs are ONLY part time jobs.  Hope you morons who voted for Obama are happy now that your pay checks will be less.

Aug 2, 2013 11:05AM
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Another pathetic jobs number to go along with our pathetic GDP.

After all the trillions spent by the gov and Bernanke, we're still floundering.  Thanks a lot, Keynesians - your idiocy knows no bounds.
Aug 2, 2013 11:27AM
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34.5??????????????????? 30HR WORK WEEK COMING SOON!! jobless rate dips to 7.4%??? translation: it  just went up to 14.7% U6 number, labor participation absurdly low! leave it to the leftists to use a dismal jobs report and twist it into a lower jobless rate, such insanity and outright fraudulent lies in the face of the public!

what happened to the 40hr work week you may ask yourself, knowing of  course the answer yourself unless you're an idiot obamazombie in denial? so now people will basically, if they can find it, have 2 jobs to make up for the loss of the 40hr work week due to the insane obamacare nightmare coming, gee what might the reason be???? what happened??? hmmmm....

I'll tell you what happened to the 40hr work week: GUILT-RIDDEN SELF-LOATHING IDIOT POLITICALLY CORRECT WHITE MORONS!

of course the religious and racial profiles are incidental but here they are anyway: Guilt ridden: Catholics Jews Baptists Episcopal Misc and lets not leave out the Godless among us the Agnostic and Atheist,

by the way what's up with that 'Agnostic' terminology anyway?? seriously?? can't you guys commit to the Atheist mantra? I mean c'mon: Agnostic = questioning the existence of God while the Atheist = complete and utter disbelief in a Creator of any kind, just commit to the latter will ya, stop complicating an already complicated existence in this once great nation, thanx...

anyway, there you go, and you ain't seen nothing' yet!! 'Unemployment declined from 7.6 percent in June because more Americans found jobs, and others stopped looking and were no longer counted as unemployed.' so what about those people who gave up looking?? do I really need to explain that one to you sane rational people? of course not....

 'Construction employment fell by 6,000, and analysts suggested (aka obama lackies) it might be due to the increase in interest rates.' oh yea, I'm sure 'THAT'S" it, interest rates, and not the fact that NOBODY IS BUYING OR BUILDING HOMES OR MAKING HOME IMPROVEMENT CONSTRUCTION since they're outta work!!!!! and need to eat!! not replace the bathroom!! cuz THEY CAN'T AFFORD THAT ADDED EXPENSE!!!!

yea, it's the INTEREST rates that cut 6,000 jobs in construction, hey, I got a Bridge here in Brooklyn I"m selling anyone interested?? anyone?? I'll give you a good price...anyone? ????? yea, guess it's the interest rate, that's why nobody wants to buy that Bridge!

Aug 2, 2013 12:25PM
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There are so many people that have given up looking for jobs, it's heartbreaking.  The black community is being hurt the most, but they don't seem to care, seems there are plenty of distractions elsewhere these folks are interested in.  I'm out and about in the business world, and I've only seen the slightest economic improvement...if at all.  With Obamacare coming, the burden on businesses is too great, so I see things getting worse until we elect a president who knows how to lead instead of knows how to blame.
Aug 2, 2013 11:54AM
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this is a false economy. if the fed tapers off the printing of money watch the market sink. The fed will have to do something soon the dollar has lost a lot of its value. if it goes much lower our currency will be worthless but that's what the world bank wants to happen so the U.S. will be forced to join the New World Order. 
Aug 2, 2013 11:51AM
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Appearing elsewhere today's in MSN Money:

 

"DESC's Moore said many Detroiters lack "soft skills" such as showing up for work, or even stay off cell phones during a job interview.  In some cases, she said, "no one in the family has worked in two generations."

 

I suspect that such problems are not limited to Detroit.

 

It's pretty clear that $85 Bil a month aside,  we'll still have a considerable mountain to climb after Helicopter Ben's departure..

Aug 2, 2013 12:58PM
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We need to create 250k to 300k jobs per month to say we have a growing robust economy. This will never happen under the Obama admin. As long as 300 plus k apply for unempl benefits every week Obamas talk is just plain rhetoric to the masses. The worst Pres ever to occupy his position as commander and chief.
Aug 2, 2013 11:54AM
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We know the problem but I don't see a concerted effort by a grassroots movement to kill Obamacare or to force the governemnt to stop spending. 
Aug 2, 2013 12:06PM
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adjust jobs numbers Down   every month.   Just like obame care 850 Billion   Yea right    Try almost 3 Trillion    maybe more?   Nancy!!!!!!!!   Do you know whats in it?
Aug 2, 2013 12:29PM
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9 MILLION JOBS lost when obama took over, never to be filled again, LOST, GONE, KAPUT, where are the 500,000 jobs promised by that idiot senile old fool joe 'the idiot' biden 4.5yrs ago??? what happened to the claim of 200K jobs needed to stabilized the country, now it's 162K????, downgraded from 500K, labor participation rate plummeting and the unemployment rate goes down?? the jobless rate is supposed to go down because tons of people are getting HIRED, not STOPPING their job searches!!!! that's not legit! no matter how you look at it you lowlife liberal parasites!! because now those people NOT LOOKING have no choice but to go on WELFARE!! oh, I"m sorry, 'public assistance' and of course the NEW WELFARE, oops!! 'public assistance' aka DISABILITY INS.

any rational person will tell you we need 300K per month for a year to turn this nation around, dropping the unemployment numbers that's the U6 numbers to the lowest levels, sustainable jobs NOT TEMP jobs!! how the hell are you supposed to pay your bills with that kind of instability? or a mortgate, or a car note, or just RENT! man, we're soooooo fcuked as a nation, and meanwhile....

what's this now??!! US embassies worldwide are shutting down for fear of a CREDIBLE attack by al Qaeda?? wow, didn't obama handle...hehe...haha! that little problem??? heheh hahah!! LOL!!!  hahah!!! I knew I could'nt say that with a straight face!

Aug 2, 2013 11:28AM
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Stocks dip while WS changes catheters and decides where to reinsert the transfusion and from where. Even a tick will take a break before it starts feeding again.
Aug 2, 2013 3:18PM
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What jobs?
Oh... the wonderful fast food, retail and telemarketing industries are hiring? Goody.
I guess we need to clear the decks for all of the tax money that these losers will be contributing... oh, wait... they're still on welfare and "working" to keep all of those federal programs in their wallets.


Aug 2, 2013 12:21PM
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It is very easy to determine who are investors and they, that are not...

 

And easier, is sorting out the pessimist from the optimist...

 

What is confusing, is why anyone would come to this Financial Site, just to blow bullshidt !!

Which one or Category are you...??

 

Aug 2, 2013 12:28PM
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So yesterday the headline was "Economy hits the gas pedal" & everything is great.  As i said in a post yesterday that today it "would back fire & stall out" and it appears at this point it has.  The Market is very predictable.
Aug 2, 2013 12:24PM
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"What this article fails to mention is any job growth or new jobs are ONLY part time jobs.  Hope you morons who voted for Obama are happy now that your pay checks will be less."

 

A few words of warning... Obama Care will succeed or require modifications, but one thing will still be wholly evident... that hired-in executives and Board Directors colluded to suppress American workers by tampering with compensation and benefit packages. They are guilty of planned economic instability and mass termination followed by job blockading-- that's terrorism. George W. Bush declared War on Terror and the proceeded to attack other countries. For a fact, all the REAL terrorists were here when he made that declaration. Know beyond any doubt that those who seek you out, hunt you down and destroy you- are patriots. You are psychopaths who made a self-determination of superiority, unearned by any specific "talent" beyond collusion and corruption. Expect what goes around to come around with a vengeance and you won't be disappointed.  

Aug 2, 2013 12:06PM
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what is different is they almost always go back and revise upward. Now they revised downward on the last 2 months. Haven't seen the breakdowns but will be interesting if these are part time and entry level heavy as they have been.
Aug 2, 2013 4:09PM
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What a miraculous turnaround.

Is it due to the Feds serving that search warrant
at ABS house and finding SRT down in the
basement with him, playing strip checkers?

Aug 2, 2013 4:13PM
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The media won't address the real problem as they "love them some Obama". Fools. I am keeping a list of media that will not address the problem. Locally a newspaper, the Virginian-Pilot had an article on the homes the Navy top brass live in on base. The homes have been there for decades. They are really nice homes that have been long since paid for. Did they mention anything about the $100 million Obama spent on vacation to Africa? No siree.
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