Malloy ‘skeptical’ of report showing jobless rate rose in July

How could Connecticut’s unemployment rate have worsened significantly in July when the state gained more than 5,000 jobs last month?

Gov. Dannel P. Malloy called out the Department of Labor Thursday, questioning the jobless numbers it released in its latest report.

Based on one survey that estimates payroll jobs in businesses, the department concluded that 5,100 new jobs were created.

And a second survey, which counts unemployed household-by-household, found that the ranks of unemployed rose by 8,600 people in July.

But the governor argued that the unemployment totals stemming from the household survey, based on past labor data, are indicative of a month that saw about 15,000 net job losses — and not 5,100 positions gained.

“That’s a difference of more than 20,000 jobs,” Malloy wrote in a statement Thursday. “A gap of this magnitude between these two surveys has never happened in the 22 years they’ve been conducted.”

“To buy into the household survey number you’d have to believe that Connecticut lost 503 jobs every day during the month of July, and there’s just no evidence to suggest that happened,” the governor added. “Unemployment claims have drifted upward, but not at a rate that justifies the household survey number.”

Even the Labor Department conceded it is hard to reconcile the results of its two surveys.

“The complete disagreement between our two key indicators of labor market health in Connecticut makes an assessment of market conditions difficult at best this month,” said Andy Condon, director of the Office of Research at the Labor Department. “These programs have proven vital to our understanding of economic conditions in Connecticut, but we will have to wait until more data comes in to see if July’s results were a statistical anomaly or an early indicator of a turning point in the economy.”

Malloy acknowledged that the unemployment rate can rise as “people flood back into the job market because they’re optimistic they can find work.”

But the governor added that “it’s going to take more than 20 months to turn around a state economy that failed, on a net basis, to grow jobs for more than 20 years,” particularly given the ongoing fiscal uncertainty tied to the European debt crisis.

The economist for the Connecticut Business and Industry Association, Peter Gioia, said the report shows “a continuing weak recovery.”

The first seven months of 2012 now have produced net job growth of 9,700, or a monthly average of 1,386, according to the July report.

Six of Connecticut’s 10 major employment super-sectors showed increases in July, led by government and education and health services.

Government gained 2,600 jobs last month. Any growth in municipal and state employment typically happens shortly after the fiscal year begins July 1, when agencies are armed with new budgets. The public sector in Connecticut had lost 3,600 jobs in June, the Labor Department reported.

Meanwhile, the education and health services sector added 2,400 jobs.

Other areas of growth included: manufacturing, up 1400 jobs; leisure and hospitality, 1,400 jobs; business and professional services, 200 jobs; and other services, 1,100 jobs.

The biggest decline was in the trade, transportation and utilities sector, which lost 1,600 jobs, though construction and mining, financial activities, and information all lost ground.

Connecticut now has recovered 38,500, or just under 33 percent of the 117,500 non-farms jobs it lost during the last recession, which officially ran from March 2008 to February 2010.

The state’s seasonally adjusted labor force — the total number of people either employed or actively seeking work — now stands at 1,912,000. That number includes 163,300 unemployed in July.

Malloy added Thursday that “we are making progress” growing Connecticut’s economy, “and I have every confidence we’ll continue to make progress.”

The administration announced an agreement Wednesday to provide assistance to Bridgewater Associates, a Westport-based hedge fund looking to add 1,200 new jobs as it develops a new 700-square-foot corporate headquarters in Stamford.