Strong July Jobs Numbers

By at 4 August, 2017, 10:32 am

But Entrepreneurship Still Needs a Big Boost

by Raymond J. Keating-

The July jobs report from the U.S. Bureau of Labor Statistics served up some solid numbers. In particular, the monthly data were strong in terms of the household survey, which better captures small business activity. At the same time, though, we saw a falloff in one key measure of early entrepreneurship.

As for the employer payroll survey, employment grew by 209,000 in July. That’s still short of a robust level exceeding 250,000 – which we have not hit very often during this under-performing economic recovery/expansion period – but it’s positive. The real strength, again, was seen in the household survey.

Growth in the Labor Force

First, the labor force grew by 349,000 in July, coming on the heels of a gain of 361,000 in June. These two months of growth were a welcome change from a big decline in May and being flat in April.

Second, as a result, the labor force participation rate increased, from 62.7 percent in May to 62.8 percent in June and 62.9 percent in July. That’s a welcome trend, though still down from 63 percent earlier this year, and of course, still far short of pre-recession levels that topped 66 percent. Let’s hope this recent two-month trend continues.

Rise in Employment

Third, employment grew by 345,000 in July, after a gain of 245,000 in June. Again, that was after a big decline in May. Through the first seven months of 2017, the household survey (which tends to be rather volatile month to month) showed solid-to-strong employment growth in five months.

Fourth, the employment-population ratio in July increased for the second month in a row, hitting 60.2 percent. That’s up from 59.7 percent in December of last year. That’s a welcome trend, and let’s hope it persists, as we still remain well short of pre-recession levels that topped 63 percent.

Entrepreneurship Red Flag

However, there was a glaring negative in this report, and that was a big decline in unincorporated self-employed (seasonally adjusted data). The unincorporated self-employed level declined from 9.571 million in June to 9.183 million in July. That was the lowest level since July 2014. Keep in mind that this compares to the pre-recession high of 10.912 million registered in April 2005.

But at least there was a bit of good news in the incorporated self-employed numbers (these data are not seasonally adjusted, so a proper comparison looks at the same month in previous years). In July, incorporated self-employed came in at 5.752 million, and that not only was up versus the July 2016 level of 5.468 million, but was the highest July level seen in the data that goes back to 2000, beating out the July 2008 level of 5.682 million. So far in 2017, the key move in a positive direction in incorporated self-employed seemed to have occurred in March and April.

Looking ahead, if we want to see strong and sustainable economic and employment growth, we have to experience stronger entrepreneurial activity and private investment. Yet, these and other key areas or measures of our economy have been weak over the past decade. (See SBE Council analyses finding daunting gaps or shortfalls in terms of real GDP, real private-sector investment, productivity, income, exports and small business exporters, and jobs, along with a disturbing shortfall in the level of entrepreneurship and in the number of businesses in our economy.)

But these trends are anything but inevitable. Shift to a policy mix of tax and regulatory relief and reform, free trade, sound money, and reining in the growth of government, and a solid foundation for growth will be established.


Raymond J. Keating is chief economist for the Small Business & Entrepreneurship Council.

Keating’s latest book published by SBE Council is titled Unleashing Small Business Through IP:  The Role of Intellectual Property in Driving Entrepreneurship, Innovation and Investment and it is available free on SBE Council’s website here.

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