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Failure to Produce More Jobs Could Be a Good Thing

For the first time since January 1996, the U.S. economy failed to produce more jobs.  To many economic analysts, the weaker-than-expected report -- one of the last major pieces of data the Federal Reserve will see before its August 22 meeting -- may serve as strong evidence that this year's six interest rate hike

For the first time since January 1996, the U.S. economy failed to produce more jobs.  To many economic analysts, the weaker-than-expected report -- one of the last major pieces of data the Federal Reserve will see before its August 22 meeting -- may serve as strong evidence that this year's six interest rate hikes are beginning to slow the economy. The unemployment rate remained at 4.0%.

Fueled by the release of another 290,000 temporary census workers, nonfarm payroll employment declined 108,000 in July, according to the Labor Department's July 2000 Employment Report. Wall Street was expecting gains near 60,000. The decrease easily offset a private-sector gain of 138,000. Some highlights from the report are listed below:

  • Construction employment edged up only 6,000, leaving its monthly average for the year at 17,000 (compared to 25,000 a month in 1999).
  • In the service-producing sector, the census retreat overshadowed a 49,000 jump in retail trade employment; overall, service jobs were down 161,000.
  • Trucking and local transit helped push transportation employment up 17,000.
  • Gains in durable goods helped to add 10,000 jobs to wholesale trade employment.

After showing little growth in the first half of the year, manufacturing industry employment grew by 46,000 in July. Some highlights are listed below:

  • Electronic components added 9,000 new jobs.
  • Instruments increased by 7,000.
  • Due to lighter-than-normal seasonal layoffs, industrial machinery, rubber and plastics, and furniture also saw gains in July.

At a Glance: Hours and Earnings

  • The manufacturing workweek increased 0.1 hour to 41.7 hours, while overtime remained at 4.6 hours.
  • Average hourly earnings rose 6 cents to $13.76, following a 5-cent gain in June.
  • Average weekly earnings edged up 0.1% to $473.34.
  • Over the past 12 months, average hourly earnings and weekly earnings have increased by 3.7% and 3.4%, respectively.

The report on August employment report will be released on September 1, 2000.

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