WASHINGTON, Aug. 6 (UPI) -- The latest politically sensitive employment report by the Labor Department could prove to be a headache for the Bush administration as it counts the days until the presidential elections.
Nationwide, only 32,000 jobs were added in July, considerably lower than market expectations, which largely believed that about 200,000 would have been created. According to the Labor Department, the manufacturing sector proved particularly disappointing, adding only 10,000 workers, while the construction industry saw only 4,000 new jobs being created. Manufacturers had been slower than other to see an economic rebound in their industry, and the latest numbers demonstrate their continued vulnerability.
Instead, the biggest gain in July was seen in the health care and social assistance sector, which saw 20,000 new positions being created, and the Labor Department said that "over the month, job growth continued in ambulatory health care services, hospitals, and child day care services."
The service sector, meanwhile, saw 14,000 new payroll positions being created last month, with jobs in the financial sector in particular feeling a squeeze. Finance and insurance workers saw jobs decrease by 25,000, with the biggest job loss totaling 16,000 in credit intermediation, an industry that includes mortgage brokerages.
But it was not all gloomy for the job market, as July's unemployment rate went down to 5.5 percent from 5.6 percent the previous month. The Labor Department noted that the unemployment rate "has shown little movement since December 2003."
The jobless rate for teenagers, however, remains high at 17.6 percent, and racially, black workers faced the most difficulty in finding jobs as the African-American unemployment rate averaged 10.9 percent, compared to 4.8 percent for whites, 6.8 percent for Latinos, and 4.3 percent for Asians.
Meanwhile, at a time when voters will be keeping a close eye on whether the Bush administration has been able to provide more work as they head to the polls, senior officials made a point of highlighting the achievements over the past three and a half years, rather than dwelling on the July data alone.
"Today's unemployment report shows that the economy continues to move in the right direction," said Treasury Secretary John Snow shortly after the release of the numbers.
"With the addition of 91,000 jobs since February, the manufacturing sector has had its best six-month period in six years...the report is a sign that the American economy is continuing on a path of growth and expansion, and that the president's tax relief continues to give momentum to that upward path," Snow added.
The head of the Bureau of Labor Statistics, meanwhile, pointed out that since August 2003, 1.5 million jobs have been created.
"About three-fifths of this growth occurred during March, April, and May of this year," said BLS Commissioner Kathleen Utgoff.
Still, Democratic presidential contender John Kerry could argue that there are still 1.1 million less jobs today than there were when Bush first took office.
And while voters may be concerned about the continued weakness in the job market, economists too were less than thrilled with the latest results.
"This is not the kind of robust job growth needed for a sustained, strong expansion of the economy," said the Washington-based Economic Policy Institute's research director Lee Price, adding that the weak labor market comes at a time when hourly wage growth continues to fall for most workers. Price also pointed out that 2003 had the highest rate of long-tenured worker displacement on record.
Peter Morici, an economics professor at the University of Maryland, echoed that negative sentiment.
The latest data "show the drag on the economy of the trade deficit, higher oil prices, poor stock market performance, and declining international investor confidence... this is a discouraging situation at this point in the business cycle," Morici said.
Economists are divided, however, on how the latest results could affect the Federal Reserve next week.
Members of the policy-making Federal Open Market Committee led by its chairman Alan Greenspan will meet Aug. 10 to vote on whether or not to tighten interest rates once again. The Fed tightened rates at its last meeting in an effort to prevent the economy from overheating, and the key federal funds target rate currently stands at 1.25 percent.
Many Wall Street analysts anticipate the central bank will raise rates by another 25 basis points to 1.50 percent at the upcoming meeting, despite the latest disappointing jobs report. But they say that the Fed is unlikely to be as aggressive in raising rates as some economists had initially feared, given the prevailing sluggishness in the labor market.
"Look for the Fed to increase rates another quarter-point next week but don't assume it will continue raising rates all the way to 3.5 percent," Morici said.
