Unemployment rate inches down, stock market calmer
WASHINGTON D.C. (BDCi) – The United States unemployment rate in July decreased to 9.1% from June’s 9.2% the government reported early Friday.
A net 117,000 jobs were added to employment rolls in the month, 154,000 from the private sector offset by a 37,000 cut in the public sector.
The jobs number was favorable to widespread economic predictions of between 75,000-90,000, and so the stock market shot up like a cannon in early morning trading, the Dow increasing in the triple digits. Then however, the rollercoaster effect arrived when investor fears over Europe’s fragile economies – notably Italy and Spain – took over and sent blue chips down triple digits. The market then did an about-face and increased again, ending the day up a modest 61 points.
Even with the gain today, the market has only had two up days in the past 11 days, bringing the index down about 10% in that period. This week’s Dow Jones index decrease of 5.8% was the worst weekly showing since March of 2009.
It is widely accepted by economists that for the U.S. economy to make a major dent in the unemployment rate, 250,000 jobs need to be created monthly. So while the July number was better than expected, it was still looked at as a concern to investors and economists alike. The one common conclusion from the report was that the economy may not be heading for another recession.
Despite the lack of excitement about the rate drop, there were a couple “silver lining” items in the report. First, of the jobs created, 24,000 of them were in manufacturing which indicates that the delay effects of the Japanese earthquake and tsunami may be subsiding. Secondly, average wages rose along with the job numbers so the economy is boosted that much more.
By Don Weinstein Source: Yahoo 5 August 2011
5:30p.m. P.D.T.