The Bureau of Labor Statistics just released its report on employment, announcing that the unemployment rate declined from 9.5% in June to 9.4% in July.  News reports seem a little upbeat, but this is very premature.  If you look at the numbers, you will see that the labor force participation fell — meaning 544,000 people are no longer being counted as “active participants” in the labor force.   In other words, it means that workers have given up or retired, and are no longer seeking employment.  If you don’t look for a job, by definition, you are no longer unemployed.   This is not a positive sign for the economy.

What really happended on the job front?  The number of jobs in the economy declined during the month by 247,000.  The decline is another reminder that the economy is in bad shape, but it is less than the declines experienced in recent months, providing further evidence that the economic cycle is reaching its trough. The less cyclically affected industries — education, health, leisure, hospitality and government – all increased, while all other industries declined. The decrease in construction jobs suggests that infrastructure stimulus money is not having an effect at this point.