YOU ARE HERE: LAT HomeCollections

The Nation

Nation's Jobless Plight Worsens

Payrolls shrink for a sixth month, though the official unemployment rate declines. Other data show personal income and confidence are up.

August 02, 2003|Peter G. Gosselin | Times Staff Writer

WASHINGTON — Jobs remained the dark side of the U.S. economy in July as American employers sliced payrolls by 44,000, marking the sixth straight month of losses, the Labor Department reported Friday.

The nation's unemployment rate dropped two-tenths of a percentage point to 6.2%, but only because more than half a million people quit looking for work and dropped out of the labor force.

The economy has shed more than 1 million jobs since the recession ended in November 2001, making this the longest stretch of "jobless recovery" in half a century.

The latest employment numbers were particularly disappointing because they followed news Thursday that the economy had put on an unexpected burst of growth this spring, raising hopes that full-fledged prosperity is just around the corner.

Optimists sought to put the best face on the new jobs numbers, saying employment is a "lagging indicator" that improves only after an economic comeback is well underway.

They pointed to separate reports Friday that showed personal income and spending rose in June, and that manufacturing activity and consumer confidence edged up in July. They noted that the hiring of temporary workers -- often a harbinger of growth -- jumped by 42,000 last month.

But even the optimists acknowledged that the new numbers were worrisome.

"I certainly would have felt a lot better if we'd had a better employment report," said Stuart Schweitzer, global markets strategist with J.P. Morgan Fleming Asset Management in New York. "If this is a recovery, it's a job-loss recovery so far, and that's troubling."

Indeed, the economy's ability to produce growth without jobs raises the specter that technology is allowing companies to meet demand for products and services without new hiring, and the country is becoming stuck in a kind of netherworld between recession and full recovery.

"Consumers can get by for a while on mortgage refinancing and tax cuts. But we need job growth to get a self-sustaining recovery," said Merrill Lynch senior economist Gerald D. Cohen.

Like Thursday's growth report, the latest employment statistics instantly were added to the presidential campaign stew.

President Bush said the nation is on the economic mend, in large measure because of a steady stream of tax cuts he championed.

"Our economy is growing and we're confident that over time people can find jobs," he told reporters after a Cabinet meeting.

Democratic presidential hopeful Sen. John Edwards of North Carolina asserted that this week's bankruptcy filing of textile giant Pillowtex Corp. demonstrated the failure of administration policies.

"Can President Bush explain to the 5,000 Pillowtex workers who lost their jobs in North Carolina how his tax breaks for the wealthy are helping the economy?" Edwards asked.

Investors, rattled that surging interest rates and falling employment could derail recovery, pushed stock prices lower. The Dow Jones industrial average lost 79.83 points, or 0.86% of its value, to close at 9,153.97. The Standard & Poor's 500 index fell 10.16 points, or about 1%, to close at 980.15.

There was almost nothing in the new employment report from which to draw encouragement. Besides July's net loss of 44,000 jobs, the report revised the June figure to 72,000, more than double what the government initially estimated. Since the beginning of the year, U.S. employers have sliced payrolls by 486,000.

The nation's manufacturing sector shed 71,000 positions in July and passed the dubious milestone of having lost jobs every month for three straight years. Since July 2000, U.S. manufacturing employment has fallen by 2.7 million.

High-tech hiring, which had shown tentative signs of rebounding, fell again. Professional and technical service employment dropped by 20,000, largely because of the loss of 12,000 computer-system design jobs.

Even the report's one apparent bright spot -- the decline in the unemployment rate -- was tarnished by the fact that it was the product of fewer people looking for work, rather than more finding it.

The Labor Department stops counting people as unemployed once they stop looking for jobs. The result last month was a drop of 556,000 in the nation's civilian labor force as well as a steep decline in the number of people considered unemployed.

The unemployment rates for African Americans and Latinos fell in July in tandem with the overall rate, but for the same reason -- fewer people looking for work and more dropping out of the labor force.

The African American rate fell to 11.1% from 11.8% in June. The rate for Latinos slipped to 8.2% from 8.4%.

Analysts cautioned that some of the trends in the July report -- including the sharp drop in the labor force -- may be the product of attempts to seasonally adjust the numbers to take into account traditional factory layoffs, and therefore may be overstated. But even with that caveat, there was little to be encouraged about.

Los Angeles Times Articles