Payrolls expanded by 117,000 jobs in July as unemployment fell to 9.1 percent, a bit of good news in what has been a dismal series of economic reports this summer. The stock market swung widely on the news -- rising, falling, then rising again.
US stocks had been in a tailspin leading up this morning's Labor Department report. They closed down 9 of the last 10 trading days, capped by a 500-point loss on the Dow Jones Industrial Average yesterday. The Dow has fallen 1,300 points since July 21, erasing all its gains for the year.
The report "should lessen fears that the recovery is truly faltering," Jim O'Sullivan, chief economist at MF Global, told the Associated Press.
The Dow closed up 60 points after having gyrated wildly throughout the day. At the opening of the markets, it surged 170 points but sellers moved in and by noon the Dow had fallen 200 points from yesterday's close. Then in the early afternoon, it reversed, surging nearly 200 points.
Investors may be disappointed because a stronger jobs report lessens the chances that the Federal Reserve will embark on another round of economic stimulation, also known as quantitative easing.
Economists were expecting 85,000 jobs to be added in July and unemployment to stay steady at 9.2 percent. In June, private employers added just 18,000 jobs.
But in July, businesses added 154,000 jobs across many industries, the Labor Department said. Governments cut 37,000 jobs last month, though 23,000 of those losses were almost entirely because of the shutdown of Minnesota's state government.
Still, even with better July numbers, the economy is not creating enough jobs to bring unemployment down significantly. The unemployment rate fell because 193,000 people left the labor force.
"The primary engine for job growth in the U.S. is the creation of small business," says Brian Miller, president and COO of the Entrepreneur's Source. "We need to free up more liquidity and capital for people to start businesses. The growth is not going to come from corporations, it's going to be the small business company."
In the last few weeks a contentious battle took place in Congress as lawmakers sought a bipartisan resolution to the nation's debt ceiling. On Tuesday, the Senate approved a deal that would trim $1.2 trillion from the federal budget.
"Congress has been, to a large degree, dysfunctional in terms of their ability to handle the debt crisis and getting our economy back on track," Miller said.
"Congress must learn to work together to take control of our debt ceiling and make sure we're not spending too much," he continued. "Corporations who are sitting on cash and holding back on making decisions on hiring people are waiting to see if congress is going to be able to get their act together and get our economy moving in the right direction."
In July, a national employment report released by the payroll processing company ADP saw the job market gain 114,000 private sector jobs.
The job market is "going to get worse before it gets better," says Doug Roberts, chief investment strategist for Channel Capital Research. "Right now there is a high degree of unemployment and usually that tends to rise because there are plenty of available people out there so companies don't need to add employees because they can add temporary workers or contract workers."
There are more than 25 million out-of-work Americans more than two years after the National Bureau of Economic Research's assessment that the recession is over.
More than 44 percent, or 6.3 million, of unemployed Americans have been searching for work for 27 weeks or more, according to the Bureau of Labor and Statistics. Discouraged from applying for jobs at some companies, the long term unemployed have experienced more bumps on the road to recovery.
According to Bloomberg News, the United States has recovered 1.8 million of the more than 8.7 million jobs lost since January 2008.
"Unemployment is so high, and if you really don't have much job growth, I call it the temporary substitution for full-time jobs and that does not bode well for consumer spending," says Roberts. "These people don't go out and spend money they tend to buckle down."
7 Factoids on the State of Unemployment from a list compiled by ProPublica:
Years it will take to get back to an unemployment rate of 5 percent : four years if we're adding jobs at 350,000 per month; 11 years if we're adding jobs at the 2005 rate of 210,000 per month
Unemployed workers per job opening: 4.98
Months that the unemployment rate has been around 9 percent or more: 28
Amount of stimulus money left to be spent: $122.8 billion of the original $787 billion
Annual rate at which the GDP grew this year: 1.3 percent between April and June, 0.4 percent between January and March
The last time the labor force participation rate was lower than it is now: 1984
Number of people who weren't in the labor force, but wanted work, as of June 2011: 2.7 million