Unemployment for July 2013

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Employment Situation

Released On 8/2/2013 8:30:00 AM For Jul, 2013 Prior Prior Revised Consensus Consensus Range Actual Nonfarm Payrolls - M/M change 195,000  188,000  175,000  150,000  to 203,000  162,000  Unemployment Rate - Level 7.6 % 7.6 % 7.5 % 7.4 % to 7.6 % 7.4 % Average Hourly Earnings - M/M change 0.4 % 0.4 % 0.2 % 0.0 % to 0.2 % -0.1 % Av Workweek - All Employees 34.5 hrs 34.5 hrs 34.5 hrs 34.4 hrs to 34.5 hrs 34.4 hrs Private Payrolls - M/M change 202,000  196,000  187,000  163,000  to 205,000  161,000

Highlights Payroll employment grew less than expected in July even though the unemployment rate came in lower than expected. Total payroll jobs in July increased 162,000 after gaining a revised 188,000 in June (originally up 195,000) and increasing 176,000 in May (previous estimate was 195,000). Expectations were for a 175,000 gain for July. The net revisions for May and June were down 26,000. The unemployment rate eased to 7.4 percent in July from 7.6 percent the month before. The consensus was for a 7.5 percent unemployment rate. Turning back to payroll data, private payrolls increased 161,000 after rising 196,000 in June (originally 202,000). Expectations were for a 185,000 advance. Private service-providing jobs increased 157,000 after a 188,000 gain in June. The July rise was led by retail trade (up 47,000), food services and drinking places (up 38,000), financial activities (up 15,000), and wholesale trade (up 14,000). Goods-producing jobs rose marginally, advancing 4,000 after an 8,000 gain in June. Manufacturing gained 6,000 in July; mining improved 5,000; and construction declined 6,000. Government jobs nudged up 1,000 in July, following a decrease of 8,000 the month before. Wage growth turned negative in July but followed a strong month before. Average hourly earnings slipped 0.1 percent in July after a 0.4 percent jump the prior month. Analysts projected a 0.2 percent gain. The average workweek was 34.4 hours, down from 34.5 in June. The market consensus was for 34.5 hours. Turning to detail for the household survey, household employment in July rose 227,000 after a gain of 160,000 the prior month. The labor force slipped 37,000, following an increase of 177,000 in June. The number of unemployed fell 263,000 after rising 17,000. July employment numbers mostly were disappointing. Payrolls were particularly soft. Some may point to the dip in the unemployment rate as leading to the Fed to soon begin tapering bond purchases. If the Fed does, it almost certainly will not be due to this employment report as payroll growth was weak and the Fed knows that the household survey is volatile due to its small sample size.

Market Consensus before announcement Nonfarm payroll employment June increased 195,000 after rising 195,000 in May. The net revisions for April and May were up 70,000. The unemployment rate held steady at 7.6 percent. Turning back to payroll data, private payrolls gained 202,000 after rising 207,000 in May. There was a notable monthly improvement in wages. Average hourly earnings jumped 0.4 percent in June after a modest 0.1 percent rise the month before. The average workweek was 34.5 hours, equaling the number for May

Definition The employment situation is a set of labor market indicators based on two separate surveys in this one report. The unemployment rate equals the number of unemployed persons divided by the total number of persons in the labor force, which comes from a survey of 60,000 households (this is called the household survey). Workers are only counted once, no matter how many jobs they have, or whether they are only working part-time. In order to be counted as unemployed, one must be actively looking for work. Other commonly known figures from the Household Survey include the labor supply and discouraged workers.  Why Investors Care

During the mature phase of an economic expansion, monthly payrolls gains of 150,000 or so are considered relatively healthy. In the early stages of recovery though, gains are expected to surpass 250,000 per month. Data Source: Haver Analytics

The civilian unemployment rate is a lagging indicator of economic activity. During a recession, many people leave the labor force entirely, so the jobless rate may not increase as much as expected. This means that the jobless rate may continue to increase in the early stages of recovery because more people are returning to the labor force as they believe they will be able to find work. The civilian unemployment rate tends towards greater stability than payroll employment on a monthly basis. It reveals the degree to which labor resources are utilized in the economy. Data Source: Haver Analytics

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