What The Latest Unemployment Numbers Mean

The unemployment rate dropped in July to 7.4 percent as employers added 162,000 new jobs. Renee Montagne talks with NPR economics correspondent John Ydstie about the latest numbers, and what they mean.

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DAVID GREENE, HOST:

This is MORNING EDITION from NPR News. I'm David Greene.

RENEE MONTAGNE, HOST:

And I'm Renee Montagne. Federal Reserve policymakers, along with a lot of regular folks, are keenly interested in the government's monthly jobs report being released later this morning. Fed policymakers will use the data to help decide whether to ease off on their stimulus soon or wait for a while. NPR economics correspondent John Ydstie joins us talk about what we should expect and what's at stake. Good morning, John.

JOHN YDSTIE, BYLINE: Hi, Renee.

MONTAGNE: Now, this report is for last month, July. What are economists expecting to see later this morning?

YDSTIE: Well, surveys show that economists are expecting about 185,000 new jobs were added to payrolls in July. And that would be in line with average monthly increases recently. In fact, a private payroll services firm, ADP, does a survey each month. It was released Wednesday and they estimate 200,000 jobs were created in the private sector. So somewhere in that range wouldn't be surprising. The surveys also show many economists think the unemployment rate will tick down from 7.6 percent to 7.5 percent.

MONTAGNE: Nice small tick down there. But would that or 200,000 jobs be enough for Ben Bernanke and his Fed colleagues to decide it's time to ease off on the stimulus accelerator a bit?

YDSTIE: Well, yeah. I think a couple hundred thousand jobs would keep the timeline on track. So in September they'd start dialing back the stimulus, their $85 billion dollar a month bond-buying program. But when Bernanke outlined the timeline back in June, and many times since, he says it depends on economic conditions. So if today's report for July and the report for August show solid progress, it would seem the Fed could begin to ease off the accelerator.

But if either of the reports disappoints, or if the Fed decides low inflation could be turning into something dangerous like deflation, then the Fed could decide to continue the extraordinary stimulus for awhile.

MONTAGNE: And from what you know, John, where is the economy creating jobs right now?

YDSTIE: Well, if the government's report is in line with the private report issued earlier this week, we'll see increases in construction and business services, things like consulting services and legal services, but we'll see more losses in manufacturing.

Actually, this whole question of where jobs are being added in the economy was addressed recently in a very interesting report from the Bureau of Labor Statistics. It looked at which occupations had been gaining or losing jobs over the years between between 2007 and 2012, so during the recession and the recovery.

MONTAGNE: And during that time, 2007 to 2012, who were the big losers and who gained?

YDSTIE: Well, not surprisingly, healthcare occupations added a lot - more than a million jobs, in fact. Management occupations also added almost 400,000 jobs. In terms of occupations that lost big, architecture and engineering lost almost 130,000 jobs. Losses were even larger for construction workers and manufacturing workers. About a 1.5 million jobs were lost in each of those categories.

But the biggest loser? Office and administrative support. Those are secretaries, administrative assistants. Almost two million of those jobs were lost between 2007 and 2012.

MONTAGNE: So are we expecting to see those jobs come back as the economy improves and now that housing seems to be improving?

YDSTIE: Well, they have been in many categories. Manufacturing lost big during the recession, then sort of led the economy out of recession and brought back a lot of workers, although recently manufacturing has been losing jobs again. Construction is beginning to add jobs. But office and administrative support have not. In fact, about half of the two million job losses in that category happened after the recession ended and the recovery started.

It looks like one of those cases of structural unemployment, where people with office skills may not be able to find jobs because their skills are no longer valuable in this economy and the jobs that they did may never come back.

MONTAGNE: NPR economics correspondent John Ydstie. Thanks very much.

YDSTIE: You're welcome, Renee.

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