FORTUNE — Investors and economists cheered July’s jobs number, which indicated that employers added nearly double the number of positions than had been predicted. Former Obama economic adviser Austan Goolsbee said that if the economy were to add 150,000 jobs a month for rest of the year the unemployment rate would come down significantly. Mark Zandi of Economy.com said the economy was back on track.
But there’s reason to believe that this month’s good jobs number, coming after a string of monthly disappointments, is a one-off and not the start of a recharged recovery. Here’s why:
First of all, the unemployment rate rose, up to 8.3%. Economists have actually been looking for this and said it would be a good sign. As more people return to the job market optimistic they will find work, the number of people counted as unemployed would rise.
But that’s not what happened. The labor force participation rate fell in July, meaning there are more people who have stopped looking for work, not less. And the more people who think their job prospects are nil, the more people who will keep their wallets shut.
Second, while the jobs number, which comes from a survey of employers, rose, the survey of households found the opposite. According to that survey, which does a better job of capturing new businesses and the self-employed, the number of people with jobs dropped 195,000. It’s not that unusual for the two surveys to diverge. And the survey of employers is generally considered the more reliable one. But still the fact that the surveys produced numbers that were almost mirror opposites should give reason for pause.
Third, the monthly jobs report is widely watched, but it’s just one read of the economy. Corporate profits appear to be slowing. Earlier this week, the Institute for Supply Management said that manufacturing activity in the U.S. fell for the second straight month. Also, this week, the government said that the GDP grew just 1.5% in the second quarter. That’s well below the 3% growth most economists believe we need to bring down the unemployment rate.
And there is some indication that the economy could continue to slow. Washington has done nothing to stem the mix of spending cuts and tax increases – the so-called fiscal cliff – that are supposed to kick in at the beginning of next year. Many think President Obama and lawmakers will strike some deal before the worst of the spending cuts and tax hikes start, but until they do the threat of the fiscal cliff is likely to weigh on the economy.
Bank of America Merrill Lynch economist Ethan Harris believes the uncertainty surrounding the fiscal cliff will begin to clip jobs from the employment numbers, with employers pausing or at least slowing hires, starting in September. For the rest of the year, Harris thinks GDP growth with stay stuck at 1.5%, which indicates jobs growth of less than 100,000 a month.
But perhaps the worst news is that the current jobs report will probably put the Federal Reserve, which looked more and more likely to launch a new round of stimulus this fall, back on hold. Fed Chairman Ben Bernanke, likely worried about the political ramifications of doing something so close to the presidential election, has indicated that he won’t launch any new programs unless there is overwhelming evidence that the economy is slowing. July’s employment numbers raise some doubts about that.
So while it’s nice on a summer Friday to let the stronger than expected jobs numbers make us all feel better, it’s important to remember this is probably just a vacation from the dour economic news, and not a signal that the more than 12 million unemployed Americas will be headed back to work anytime soon.