Today’s jobs report isn’t great, but it’s better. For the moment, that’s good news–great news, if you consider the alternative outcome implied by yesterday’s steep market loss. Private-sector payrolls rose by 154,000 in July, nearly double June’s revised 80,000 gain. Although government jobs overall decreased 37,000 last month, the momentum in the private sector was enough to bring the unemployment rate down ever so slightly to 9.1%. In short, we dodged another bullet. There are still plenty of challenges ahead, as there have been all along, but today’s payrolls report for the private sector is strong enough to keep the recession risk at bay, if only on the margins and just long enough until the next data point arrives.
Last month’s net gain in private-sector jobs was the highest since April’s 241,000 rise. We’re still well below that figure, but it’s also obvious that we’re comfortably above the below-100k reports for May and June. Is the two-month slump over? Hard to say, and there are lots of reasons for staying skeptical. It’s still going to take time to figure out how much the economy has slowed, and what it implies for the fall. But at least today’s update extends the rationale for optimism, albeit an optimism that’s simply looking for evidence that there’s no recession lurking around the next bend.
“While I do not think this sounds the all-clear signal, it does quell some of the conversation that the U.S. is falling back into a recession, says Tom Porcelli, chief U.S. economist at RBC Capital Markets. “There are still plenty of headwinds, like Europe. This report pulls us back from the ledge a little bit.”