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U.S. celebrates dramatic jobs improvement
 
 
By Alia McMullen, August 7, 2009
Bureau of Labour Statistics figures showed Friday that the U.S. jobs 
market shrank by 247,000 in July, a result that would hardly cause a 
market rally in good economic times. However, it was the smallest 
decline in employment since August last year.
 
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Bureau of Labour Statistics figures showed Friday that the U.S. jobs 
market shrank by 247,000 in July, a result that would hardly cause a 
market rally in good economic times. However, it was the smallest 
decline in employment since August last year.
Photograph by: Reuters/Lee Celano, Reuters/Lee Celano

The trumpets sounding the end of the U.S. recession blared louder 
Friday as global markets celebrated a dramatic improvement in the pace 
of job losses and the prospect of better times ahead for the world�s 
biggest economy. But in Canada, the mood was dampened by the worst 
decline in domestic employment in four months, a stark reminder that 
although the recession has likely ended, the recovery will be bumpy.

�July�s U.S. employment report is the gift that keeps on giving. Nearly 
every element of it is positive,� said Paul Ashworth, the senior U.S. 
economist at Capital Economics.

Bureau of Labour Statistics figures showed Friday that the U.S. jobs 
market shrank by 247,000 in July, a result that would hardly cause a 
market rally in good economic times. However, it was the smallest 
decline in employment since August last year and one-third the pace of 
the 741,000 jobs lost in January. Furthermore, the unemployment rate 
fell for the first time in 15 months, slipping one basis point to 9.4%.

Mr. Ashworth said while the jobs market continued to shrink, the data 
was consistent with recovery, supporting the unofficial view that the 
longest U.S. recession since the Great Depression ended in June. The 
U.S. economy lost 265,000 jobs in the first month of the recovery after 
the 2001 recession and 226,000 jobs in the first month after the 1991 
downturn.

�The most encouraging part of the report was the fact that the total 
hours worked increased for the first time in about a year,� said 
St�fane Marion, the chief economist at National Bank Financial. �This 
normally precedes the start of a hiring trend that should be led by the 
temporary-help supply agencies in the coming months.�

The result caused the S&P 500 to rally 13.40 points, or 1.3% to 
1,101.48, while the Dow Jones industrial average rose 113.81 points, or 
1.2%, to close at 9,370.07.

Canadian stocks also rose on the better-than-expected report from its 
biggest trading partner. However, the rally was muted by surprisingly 
bad Canadian data. The S&P/TSX composite index increased by 91.96 
points, or 0.9%, to 10,885.33, however the Canadian dollar fell by 
almost half a cent to US92.40�.

Statistics Canada figures showed the Canadian economy lost 45,000 jobs 
in July, about three times the drop expected by economists. Despite the 
decline, the unemployment rate was unchanged at an 11-year high of 8.6% 
because of a drop in the number of people looking for work.

The large drop in employment was disappointing, but the fact it 
declined was no surprise because hiring tends to lag economic growth.

�No one said it was going to be a smooth recovery, and especially not 
for employment,� said Douglas Porter, the deputy chief economist at BMO 
Capital Markets.

The details of the report showed employment in the tourism related food 
and beverage industry took a hard hit in the month, while a lack of 
summer jobs weighed heavily on students.

Stewart Hall, an economist at HSBC Securities, said the employment data 
would look even worse if it were not for a 35,000 rise in self 
employment, a category that has risen by a whopping 102,500 since July 
2008.

�We remain skeptical of the category and question what in the midst of 
a recession these people are doing with their time and what 
contribution to GDP could reasonably be expected,� Mr. Hall said.