Rates & Stocks Drop On July Jobs Report: +71k Private Sector Jobs, 9.5% Unemployment (CHARTS)

Currently the Dow is down 120, S&P is down 15, and mortgage bonds are up 25 basis points, bringing rates down by about .125% following the Bureau of Labor Statistics report showing only 71k private payrolls were added to the U.S. economy in July, and June was revised down 100k. Additional commentary and charts below.

The BLS non-farm payroll report showed that the economy lost 131,000 jobs in July which reflects the fact that 143,000 government census workers have now completed their work. Actual new private sector jobs were 71,000 for July and 630,000 for 2010, most of which was in March and April. Estimates called for 87k total jobs lost (instead of 131k), and this disparity is why the market reaction is bad for stocks and good for rates. BLS also reported that 14.6 million people are unemployed. This is a 9.5% unemployment rate, up 4.6% since the recession began in December 2007. See charts and more commentary on the U.S.’s 8.5m involuntary part-timer workers below.

Additionally there are now 8.5 million people who would like to work full time but are working part time because their hours have been cut or they can’t find full-time jobs. This forced-into-part-time-work category is up 3.6m million since January 2008. This number decreased 623k since April. This is the fine print of the jobs report—the headline job loss and unemployment statistics show that these 8.5 million people are employed and therefore not in the job loss category, but because of their job status these 8.5 million workers aren’t likely to be consuming at normal levels. This poor statistic in the jobs report is mostly unreported, but until there’s movement here, a sustained recovery seems hard to achieve.

CHART 1: PRIVATE SECTOR JOB GAIN/LOSS DEC 2007 TO JULY 2010

CHART 2: JULY 2010 JOBS BY SECTOR

CHART 3: JOB LEVELS JANUARY 2000 TO JULY 2010