Groundhog month

US jobs data entrench slow-growth economy

US jobs data show how entrenched its slow-growth economy has become. July's unemployment rate might now be at a four-year low, having fallen a fifth of a percentage point to 7.4 per cent, according to numbers released on Friday. But the latest figures confirm too many new jobs are either temporary, low paid or both. And digging down deeper shows there are other distortions to the headline drop in out-of-work Americans. With growth and incomes also sluggish, an anaemic recovery look is here to stay. Even on the face of it, the employment data was disappointing.

Nonfarm employment gains of 162,000 were below forecasts, and May and June's numbers were revised downward by 26,000. Most gains were heavily concentrated in retail trade, food service and drinking places and professional and business services. All of these tend to be lower-wage sectors. Manufacturing added only 6,000 jobs, has added only 18,000 jobs in the past year. Construction, which should be strongly aided by the Fed's huge bond-buying programme, actually lost jobs. One minor bright spot was government, which added jobs for the first month since April. This implies the four-year decline in local government work has ended and municipalities' finances are improving. Consider, though, the share of the population actually employed. That remained flat, compared with June at 57.4 per cent. It has risen only 0.2 percentage point in the past year and is still six percentage points below its December 2006 peak.

On top of that, while the number of employees continues to increase - and will cross its 2007 peak next year if current trends continue - the population increase of the past six years means more people remain detached from employment. Rather than being counted as "long-term unemployed" - these numbers have declined by 921,000 in the past 12 months - they have simply dropped out of the available workforce.

Other recent data have been discouraging, too, with second-quarter gross domestic product growth below two per cent and real personal income declining. The current snail's-pace growth in the job market looks as good as it gets. That's scant comfort to those not benefiting from it.