Factories hire, unemployment rate down, job loss up, what gives?

The unemployment rate is the great ball and chain putting a drag on U.S. economic recovery. It’s such a problem that even though the unemployment rate fell from 9.7 percent in May to 9.5 percent in June, more jobs were cut than were created. Within the jobs report, the stats were skewed by jobless Americans out of the labor force. The stock market rose slightly on Friday morning. But soon after a decline in factory orders was reported around 10 a.m., the Dow Jones Industrial Average lost about 32.5 points. The US economy has a lot of conflicting information. Even as job creation, factory orders and consumer confidence fell, some manufacturing companies that want to hire can find workers with the kind of skills they need.

Source for this article: Unemployment rate down, job loss up, factories hire, what gives

Every little thing with unemployment rate and consumer confidence

The whole economy is affected by the unemployment rate. An uncertain employment picture wreaks havoc on consumer confidence, which declined sharply in June. The decline in consumer confidence led to a decline in auto sales, and pushed pending home sales off a cliff as tax credits for home buyers expired. Consumer spending makes up 70 percent of the U.S. economy, and disposable income is just a memory for millions of jobless workers.

Why the unemployment rate dropped:

The unemployment rate reached its lowest since July 2009. But as outlined by the Wall Street Journal, the decline wasn’t due to improvement within the labor market. June’s unemployment rate should have increased with a 125,000 job loss. But 652,000 people gave up looking for a job -- the sharpest one-month decline in 15 years within the Labor Department’s survey. The Journal speculates that some could be choosing to pursue other opportunities like school. Some are at the end of their unemployment benefits. Whatever the reason, over the past two months almost 1 million individuals stopped looking for work.

New jobs seem to be a mismatch for unemployed workers

The unemployment rate remains stubbornly high because plenty of individuals are still applying for the jobs. It was reported by the New York Times that the problem is a mismatch between the kind of skilled workers needed and the ranks of the unemployed. Domestic manufacturers accelerated the long-term move toward more automation, laying off their lowest-skilled workers and replacing them with cheaper labor abroad. Now these companies need to hire some new people who can operate sophisticated computerized machinery, follow complex blueprints and demonstrate higher math skills than old-school assembly line workers.

A silver lining within the jobs report?

One must dig deep to find some positives about the latest jobs report. It was reported by the Washington Post that Friday's jobs report could mean the economic recovery that began last year has lost momentum, but the numbers aren't so bad as to suggest the nation is heading into a double-dip recession. The numbers, although weak, show just how far the U.S. economy has fallen. The job growth number, for example, is a decline from stronger levels in March and April, but the June job creation number of a mere 83,000 is better than any month out of the past 31, other than the last two.


More data accessible at these websites:

New York Times

nytimes.com/2010/07/02/business/economy/02manufacturing.html?_r=1&ref=us

Wall Street Journal

blogs.wsj.com/economics/2010/07/02/why-did-the-unemployment-rate-drop-2/

Washington Post

washingtonpost.com/wp-dyn/content/article/2010/07/02/AR2010070202004.html?hpid=topnews