What will Friday's jobs report tell us?

Investors are anxious to see if hiring can maintain its strong pace in the second half of the year.

By MSN Money Partner Jul 31, 2014 4:24PM
By Ben Leubsdorf, The Wall Street Journal

The first half of 2014 saw the U.S. economy's strongest stretch of hiring since early 2006

The jobless rate fell to 6.1 percent in June from 7.5 percent a year earlier, its fastest one-year decline since October 1984, and nonfarm employers added a seasonally adjusted 288,000 jobs.

Can hiring keep up its strong pace in the second half of the year? We'll get our first clue Friday at 8:30 a.m. EDT, when the Labor Department releases its jobs report for July


Economists surveyed by The Wall Street Journal expect payrolls to rise by 230,000 and the unemployment rate to remain at 6.1 percent.


Here are a few things to watch:

 

Where's the hiring?

The June jobs report was strong in large part because hiring gains were broadly shared by sector. Professional and business services employment rose by 67,000, retail jobs were up by 40,000, health-care employment rose by 21,000 and manufacturers added 16,000 jobs. Even public payrolls grew, with federal, state and local agencies adding 26,000 jobs. Similar widespread gains in July's report would be a further sign of broad improvement in the labor market.

 

Output versus jobs

Hiring accelerated in the first half of 2014, but overall economic growth did not. Gross domestic product, the broadest measure of output across the U.S. economy, fell at a 2.1 percent annual rate in the first quarter before bouncing back at a 4 percent pace in the second quarter. 


Wednesday's stronger-than-expected GDP reading for the second quarter "eases some of the tension between payrolls and GDP data we have seen as of late," BNP Paribas economists Bricklin Dwyer and Laura Rosner said in a note to clients. But the divergence between strong jobs growth and lackluster GDP growth still poses something of an economic mystery. Friday's report will provide solid detail on the labor market side headed into the second half of the year.


In, out and on the fence

The labor-force participation rate in June was 62.8 percent, its lowest level since early 1978. While the participation rate appears to have bottomed out in recent months, it hasn't started moving up again, which would be a sign that people are rejoining the workforce after previously giving up on finding jobs. 


Keep an eye, as well, on the long-term unemployed, people who have been out of work for more than six months. In June they totaled 3.1 million, roughly a third of all unemployed Americans, though their ranks had thinned by 1.2 million from a year earlier.

 

Where's wage growth?

Average hourly earnings of private-sector workers rose 2 percent in June from a year earlier, in line with the sluggish wage growth seen in recent years. But a separate Labor Department report out Thursday that measures total compensation costs, the Employment Cost Index, rose 0.7 percent in the second quarter for its biggest jump since 2008


Friday’s July update on hourly earnings could signal if wages are indeed on the rise. Acceleration in wage growth could boost consumer spending, which is the mainstay of the U.S. economy. Continued sluggishness, on the other hand, could hold back spending and the economy as a whole. (Friday morning also will see the release of a Commerce Department report that includes the June reading for the Federal Reserve's preferred gauge of price inflation, the personal consumption expenditures price index.)

 

The Fed is watching

The Fed, in its policy statement Wednesday, acknowledged that the labor market is improving though it also noted that "a range of labor market indicators suggests that there remains significant underutilization of labor resources." 


Fed officials will closely examine Friday’s jobs reports for signs of a tightening labor market -- a rise in wage growth, a broad drop in unemployment -- or signs of continued slack, such as a persistently low labor force participation rate. Either, or both, would feed into the Fed's ongoing debate about when to begin raising interest rates, which have been pinned near zero since December 2008.


More from The Wall Street Journal

31Comments
Jul 31, 2014 6:51PM
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Strong pace? Guess they are impressed by part time and temp jobs.
Jul 31, 2014 7:26PM
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"What will Friday's jobs report tell us?"

That not enough people are working.


Jul 31, 2014 7:25PM
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There are  LIES, DAMMED LIES AND STATISTICS

I DON' T  TRUST ANYONE AND I DON'T BELIEVE ANYONE 
Jul 31, 2014 6:50PM
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Yea, stonger than expected.  How many times have you heard that? 
Jul 31, 2014 7:50PM
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Nothing we don't already know!  $4 trillion created a lot of $50,000 salaried jobs costing $200,000 each.
Jul 31, 2014 7:58PM
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I DON'T HAVE ONE SO FU## THEM AND THEIR REPORT
Jul 31, 2014 7:19PM
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The Jobs report will show an increase.  Most of the jobs will be service industry related.  There is a lack of experienced, and qualified new hires.  Mfg's are still struggling, and expect more layoffs in this sector continuing, as there is no demand for new products. Most business and consumers are fixing what they have, and using third party service organizations, as they tend to be 10-20% less expensive over the life of there equipment.

Resourcefulness is the new style of management. Expect lower wages unless your in a niche which requires specialized training and experience. 

Jul 31, 2014 11:43PM
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Stronger than expected until quietly revised downward a month from now.


Aug 1, 2014 10:44AM
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LOL jobs report was weak!!!!

 

thanks for the "recovery" after 5.5 years obama

Aug 1, 2014 12:37PM
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In some of the recent articles and projections, we have been reading; Are showing that more people are entering the workforce....

And/or with lay-offs and baby boomers retiring, it forces the numbers of U/E up ??

Seems that in the last few years a lot more employers (usually smaller operations) are getting some of their more "favored" employees to retire on the Government's dime as a replacement or sweetener to having a pension...Another practice that I'm sure is skewing the numbers.??? IMO.


Draw U/E for a year or two in your late 50s or early 60's to get you through to SS or anything else you can con Uncle out of; When you really don't want a job anyway.

Just show up for job apps or interviews, and nobody hires someone that's 60 years old...

Then get some part time work under the table, that gets you by...And pays you CASH.

All these shenanigans are helping to kill the system for younger workers, that could certainly be more productive, or contribute back to the system. IMO.


On top of all that, there are the Corporations that are squeezing 20-40% more production out of scared workers....Then paying CEOs and other Executive's bonuses and over bloated pay, plus keeping their "share holders happy" with share buybacks and small dividend increases...

Sure, we like that, because we are investors...But the system is broke and no one is helping or forcing it to be fixed...And every excuse in the book is being used, (and worst)  is being excepted that this is the way to run business in America TODAY..


"Trickle down economics" is nothing but piss running down the legs of the Middle Class and worst yet for the working poor....

The theory has never worked and probably never will, while "the greed of the few" more then outweighs "the needs of the many"...

We are turning Americans into a "needy Nation" that are slowly losing all pride and ambition to be "the best they can be"...It will eventually haunt the Rich and Elite and turn our Government into "imbecilic fools"...


"Any Man who thinks he can be Happy and Prosperous

by letting the Government take care of him:

Had better take a closer at the American Indian".

          Henry Ford....

Jul 31, 2014 11:32PM
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so why do they always look outside the box and not inside? the companies and corporations solely responsible for their stocks price they should never lie hype add bs to their selling of their stocks.
Aug 1, 2014 9:49AM
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V_L, "When I post the historic TRUTH and get majorly thumbed down overnight, it only tells readers that there really is manipulation and there really is an enemy of us all causing our pain. Is it the Tea Party? Are they Republicans? Skull & Crossbones Club members? All of the above? Who?"

V_L, we both Know that there is are groups on the Web that use thumbs up and down to press their Political Agenda. That has been the case since the inception of posting boards. This is why internet Polling is for the most part, Useless. Every time we see a particular poll, you will see the piling on of negatives to push the usual Political Agendas. In the Real World, thumbs up or down have little meaning. On posting Boards, some folks see it as a way to suppress others Free Speech while thinking it Helps their own. All it really does it exposes them. That's the case even when it's not Political motivated. Same BS for Twitter/FB and their methodology.
Aug 1, 2014 7:21AM
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When I post the historic TRUTH and get majorly thumbed down overnight, it only tells readers that there really is manipulation and there really is an enemy of us all causing our pain. Is it the Tea Party? Are they Republicans? Skull & Crossbones Club members? All of the above? Who?
We are certainly in a strange time... killing off regular hard-working people so garbage can rule the greatest nation on Earth. I have news for you... what makes it great are regular people. When it is just garbage, it won't be great at all, it will be a garbage dump. 
Aug 1, 2014 9:57AM
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I find it laughable that only the Last 5 years some folks have decided to decipher the quality of the Job Reports. If they did the same before then, they would have a Rude awakening. Also, it's ironic how a devote Republican Dr. Evil from Shark Tank on one hand talk about how MSFT cut 18,000 Jobs and on the other hand about the Underground Job Economy.

He stated how it was so great that they cut so many jobs and that they should cut another 18,000. He went on to state how the Underground Economy and Jobs is being severely under counted. We are NOT going to ever have an Robust/Quality Job Growth while Corporations are more concerning with Rewarding the top 1% via massive Stock Buybacks and Dividends as opposed to massive Cap X spending.

The Debate that I rarely see, how robust the Economy would be if Cap X was going up as opposed to Financial Engineering. The Bogus low Rate Environment won't last forever, and all some these Corporations will have to show for it, their own overpriced Stocks on the Balance Sheet.

Aug 1, 2014 9:26AM
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V=L....I had to let you know that I gave myself a "thumb up" thing...I didn't have any...boo hoo..


But it sure makes me feel better;  I guess ??

I don't give out too many thumbs, more apt to be fingers...

Aug 1, 2014 7:16AM
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We haven't had an economy since 1999. In October, 1998, banks enacted a coup that collapsed the credit facilities of their competitors, then bought those failed entities in 1999 for pennies on the dollar. Once possessed, bankers were clueless as to how they operated and orchestrated the failure that led to the housing collapse. Banks also recommended job cuts to major employers who mass terminated the former middle class. Then we bailed banks instead of the former middle class because Hank Paulsen (Treasury Secretary and former CEO of  told Congress to do it). We've been living a GOP lie since. 
Time to go after these terrorists, try and destroy them. Obama has been overwhelmed by the Skull and Crossbones traitors blockading careers, hoarding cash offshore, controlling the Supreme Court and the Fed. Only WE THE PEOPLE can correct this. Time for a BBQ like no other.  
Aug 1, 2014 7:51AM
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And now you are reading "tea leaf psychology" into the thumb up/down thing...Sweet Geezus..!!


Aren't those just idiots and a "few" serious readers or commenters, that have the need to show their approval to make you feel more secure about some of the dribble that you conjure up, or manage to type out day after day...


And then I'm guessing, others use that to vote you up or down, so as to feel they are included in the forum discussion....If that is what you or others, would like to think this is,???

More like "playground bullying" instead of any meaningful relationships or responses.

Jul 31, 2014 9:00PM
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We haven't had an economy since 1999. In October, 1998, banks enacted a coup that collapsed the credit facilities of their competitors, then bought those failed entities in 1999 for pennies on the dollar. Once possessed, bankers were clueless as to how they operated and orchestrated the failure that led to the housing collapse. Banks also recommended job cuts to major employers who mass terminated the former middle class. Then we bailed banks instead of the former middle class because Hank Paulsen (Treasury Secretary and former CEO of Goldman Sachs told Congress to do it). We've been living a GOP lie since. 
Time to go after these terrorists, try and destroy them. Obama has been overwhelmed by the Skull and Crossbones traitors blockading careers, hoarding cash offshore, controlling the Supreme Court and the Fed. Only WE THE PEOPLE can correct this. Time for a BBQ like no other.  
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