In a reversal from June, when it created 22,000 jobs, U.S. manufacturing lost 15,000 jobs in July, the U.S. Labor Department reported on August 4. Although substantial, July's manufacturing job loss was not as great as the 20,000 that economists at Merrill Lynch & Co., New York, had forecast.
In July, the transportation equipment sector of manufacturing lost 9,000 jobs, reflecting in part the worker buyouts at General Motors Corp. Computer and electronics makers shed 8,000 jobs, and textile mills laid off 2,000 workers last month. The 8,000 jobs added in machinery in July and the 4,000 created in chemicals weren't enough to offset the losses elsewhere in manufacturing.
Overall, the non-farm U.S. economy, of which manufacturing is an element, added 113,000 jobs in July, well below the 145,000 that economists generally had anticipated. July's job-creation rate was also below the 150,000 monthly average needed to keep up with population growth. The national unemployment rate rose to 4.8% in July from 4.6% in June.
Manufacturers and other business firms appear to be cautious -- or at least selective -- in their hiring as the economy slows from the heady pace of this year's first quarter. In the first quarter, the economy grew at an inflation-adjusted annual rate of 5.6 %; in the second quarter, growth slowed to an annual rate of 2.5%, according to the U.S. Commerce Department's initial estimate.
July's employment numbers will figure in August 8's Federal Open Market Committee decision on whether or not to again increase the influential federal funds target rate, now at 5.25%. The committee has raised the rate a quarter-point 17 times since June 2004. On Tuesday, the committee must decide whether inflation or slower-growth with higher unemployment is the greater threat to the economy.