The reading on July employment is due Friday morning, August 7, from the Bureau of Labor Statistics and many are expecting it to show further improvement. Economists surveyed by Thomson Reuters predict net payroll losses in the area of 320,000, which would be a marked improvement from the 467,000 jobs decline in June. The August 6 report showing that new weekly unemployment insurance claims fell by 38,000 certainly supports a more positive outlook.
Interestingly, the household survey, which is used to determine the unemployment rate, is also showing signs of improvement. Unlike the payroll survey, the household survey counts people in agricultural jobs, the self-employed, unpaid family workers and private household workers. Since the recession officially began in December 2007, the number of unemployed has grown by 7.5 million. In the first quarter, an average of 684,000 people became jobless each month. That pace dropped to a monthly average of 522,000 newly unemployed in the second quarter. In June, the number of unemployed grew by just 218,000, the lowest gain since last September.
Unfortunately, the number of unemployed is likely to continue growing, albeit more slowly, even after a recovery begins. The reason is that a recovery will entice more job seekers who had given up and officially left the labor pool to resume their searches. For this reason, the unemployment rate is likely to continue growing even as the number employed Americans increases.