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July Jobs Report

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Friday’s Jobs Report showed the economy added 255,000 jobs in July. The unemployment rate held steady at 4.9%. The results easily beat estimates of 180,000. Employment gains for June and May, meanwhile, were revised up by a combined 18,000.

The government said 292,000 new jobs were created in June instead of 287,000. May’s gain was raised to 24,000 from 11,000. The 3-month average is now 190,000, which is much higher than previously anticipated.

Over the last six months, the economy has added an average of 189,000 jobs a month. In July, the year-over-year change was 2.45 million jobs. A monthly gain of 75,000 to 100,000 jobs is sufficient to keep the unemployment rate steady, while a 125,000 monthly gain is what is required to nudge it down further. The economy has added jobs for 76 consecutive months.

While a maturing labor market will translate into lower job creation over the next twelve months, reduced labor market slack should provide an offset through stronger wage growth. So, a gain of 255,000 is a very good, very solid report.

The unemployment rate was unchanged at 4.9% as more than 400,000 people joined the labor force in search of work in July, a sign they think more jobs are available. Job openings remain near a record high. The number of unemployed persons was essentially unchanged at 7.8 million.

In July, the number of persons unemployed less than 5 weeks decreased by 258,000. At 2.0 million, the number of long-term unemployed (those jobless for 27 weeks or more) was about unchanged over the month and accounted for 26.6 percent of the unemployed.

The resilience of the labor market was reflected in wages and how many hours people work each week. Hourly pay rose 0.3% to $25.69, keeping the 12-month increase in wages at a post-recession high of 2.6%. Inflation is tame, so workers are seeing some modest gains in wages. The average workweek rose 0.1 hour to 34.5 hours, just a tick below an eight-year high.

Every major industry hired in July except for mining and energy companies, which cut 6,000 jobs because of lower oil prices. Business and professional firms led the way, adding 70,000 jobs.

Heath care providers hired 43,000 new workers, and restaurants and hotels added 45,000. Manufacturing, construction, transportation, retail trades, wholesale trades, and utilities sectors all added less than 15,000 jobs each – basically unchanged from June.

Temporary-help jobs, a harbinger of future hiring, increased 17,000. Government added 38,000 new jobs; and this is something different; the recovery has happened without government adding jobs. In fact, we have lost government jobs since 2008. So this should provide a little added boost to the labor market.

An alternate measure of unemployment, called the U-6, increased to 9.7%, up from 9.6% in...