(RTTNews) - Employment continued to decrease in the month of July, according to a report released by the Department of Labor on Friday, although the drop in jobs was smaller than expected. At the same, the report showed that the unemployment rate jumped to a four-year high.

The report showed that non-farm payroll employment fell by 51,000 jobs in July, matching the revised decrease for the month of June. Economists had expected employment to fall by 75,000 jobs compared to the decrease of 62,000 jobs originally reported for the previous month.

With the decrease in jobs in July, employment fell for the seventh consecutive month. The U.S. job market has subsequently lost 463,000 jobs so far this year.

The continued decrease in jobs was partly due to notable weakness in employment in the goods-producing sector, which lost 46,000 jobs. Construction employment fell by 22,000 jobs, while manufacturing employment decreased by 35,000 jobs.

The report also showed a decrease of 5,000 jobs in the service-providing sector, with decreases in retail and business services jobs more than offsetting increases in government and education and health services jobs.

As mentioned above, the Labor Department also said that the unemployment rate rose to 5.7 percent in July from 5.5 percent in June. The increase came in above the expectations of economists, who had expected to unemployment rate to edge up to 5.6 percent.

The bigger than expected increase in the unemployment rate lifted it to its highest level since March of 2004, when the unemployment rate came in at 5.8 percent.

The report also showed that employees’ average hourly earnings increased by $0.06 or 0.3 percent in July to $18.06. The modest increase follows gains of $0.05 in June and $0.06 in May.

The continued weakness in the labor market is likely to raise concerns about the outlook for the broader economy, as consumers are less likely to make discretionary purchases if they are worried about losing their jobs.

On Thursday, the Commerce Department released a report showing that gross domestic product increased by 1.9 percent in the second quarter following a revised 0.9 percent increase in the first quarter. Economists had expected GDP to grow 2.3 percent compared to the 1.0 percent growth originally reported for the previous quarter.

The Commerce Department said that the acceleration in the pace of growth reflected a larger decrease in imports, an acceleration in exports, a smaller decrease in residential fixed investment, and an acceleration in consumer spending.

At the same time, the report also showed that the economy actually shrank in the last 3 months of 2007. The data for the fourth quarter was revised to show that a 0.2 percent contraction compared to the 0.6 percent growth that was previously reported.

Nonetheless, the data still does not meet the technical definition of a recession, which is two consecutive quarters of economic contraction. However, there is some concern that further revisions could eventually indicate a recession beginning in late 2007.

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Posted in Categories: Economy, Forex, Releases, USA.

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