Joblessness Rises Amid Uncertainty
Saturday, August 5, 2006
Unemployment jumped last month to 4.8 percent as home builders, retailers and other employers grew more uncertain about hiring in a slowing economy, the Labor Department reported yesterday.
Hiring was weakest last month in the industries most affected in recent months by rising interest rates and high energy prices, which have dampened home sales and crimped consumer spending.
"The various headwinds that have served to reduce overall economic growth are also being felt in the job market," said Jared Bernstein, senior economist at the Economic Policy Institute, which focuses on labor issues.
Stocks and bonds rallied initially after the employment report was released because it bolstered investors' expectation that Federal Reserve policymakers will not raise interest rates when they meet Tuesday, after more than two years of steady hikes.
Employers added 113,000 new workers in July, matching the average monthly increases of the previous three months. The pace of job growth has declined sharply from the average 176,000 workers added in the first three months of the year.
The jobless rate rose in July from 4.6 percent the month before, as the increase in workers looking for jobs exceeded the number who found them. The July figure was the highest since February, when the unemployment rate was also 4.8 percent.
Automakers and other manufacturers, real estate agencies, department stores, and temporary employment services were among the companies that cut jobs last month. Construction companies added 6,000 jobs last month, after adjusting for seasonal variation. But overall, the industry has shed 2,000 jobs over the past three months -- a sharp contrast to a net increase of 79,000 in the first three months of the year. Retail employment was flat overall in July after three months of losses.
Employers in these industries aren't sure whether the economy is going through a temporary soft spot or entering a longer downturn, analysts said.
"They do see a slowdown, but they don't know the size of the slowdown," said John Silvia, chief economist at Wachovia Corp.
In contrast, job growth was solid last month in health care, education, law, finance, computer systems design, architecture and other areas with growing demand for highly skilled professionals, Silvia noted.
"We're hiring all over the place," said Tatiana Stead, spokeswoman for Capital One Financial Corp., the McLean-based credit card company that is expanding into traditional banking. The company has recently opened branches in Oklahoma and Kansas and is hiring tellers, branch managers, personal bankers, marketing professionals and other workers in Louisiana, Texas and Virginia, she said.
The Inova Health System, which includes Inova Fairfax Hospital, is finding it "really hard to fill" numerous openings for registered nurses, pharmacists, respiratory therapists and other highly skilled health-care jobs, said Che Parker, director of public relations.