Employers fail to add new jobs in August
The number of employers adding jobs in August was unchanged and the unemployment rate held steady at 9.1 percent, the government said Friday in a disappointing report.
WASHINGTON — The number of employers adding jobs in August was unchanged and the unemployment rate held steady at 9.1 percent, the government said Friday in a disappointing report.
Nonfarm payrolls grew by roughly zero, the Bureau of Labor Statistics (BLS) said. That's an unusual number for monthly changes. Many mainstream economists had been expecting payroll growth of 50,000 or greater.
Government statisticians revised downward July and June hiring estimates by 35,000 and 26,000 respectively, showing the economy losing speed through the summer.
Among the apparent causes: a sharp drop in consumer and business confidence stemming from partisan head-butting in Washington, D.C., over raising the debt ceiling in July, which led Standard & Poor's to downgrade its rating of Treasury creditworthiness.
"The economy has stalled-out in the wake of the debt-ceiling spectacle and S&P downgrade. Businesses stopped hiring last month and government continues to cut workers. The broad job weakness across industries and the decline in hours worked suggest the economy is perilously close to double-dipping" back into recession, said Mark Zandi, chief economist for forecaster Moody's Analytics.
"A recession is not assured since businesses have not increased their layoffs, but they soon will be if policymakers don't act aggressively to shore up confidence."
The Dow Jones industrial average fell by more than 200 points in the first half-hour of trading as investors fretted over the worse-than-expected jobs report. Other U.S. and major global stock indexes were all off by 2 percent or more.
As bad as Friday's jobs report was, it contained anomalies. The jobs total was skewed by a drop of 48,000 in the information sector, most in telecommunications. Some 45,000 striking Verizon workers were not counted on payrolls during August, BLS said.
That's important because private-sector employers added 17,000 jobs during August. That number is likely to rise in September because the Verizon strike is over.
Another August setback: 17,000 government jobs were lost — the same number created by private employers. Since the peak of September 2008, about 550,000 government jobs have been cut.
There were a few bright spots in the report. Health-care hiring, expected to slow, remained robust at nearly 30,000. And the broad category of professional and business services was up by 28,000 positions. These white-collar professional jobs imply spending growth.
Another important gauge of future hiring is temporary services. Hiring in this sector was up only modestly, rising nearly 5,000. That hardly signals an intention to resume robust full-time hiring.
The hard-hit construction sector lost 5,000 jobs in August. Construction suffers from huge unresolved problems in housing nationwide.
Manufacturers shed 3,000 jobs. "For the past four months, manufacturing has added an average of 14,000 jobs per month, compared with an average of 35,000 jobs per month in the first four months of the year," BLS said.
The weak manufacturing numbers did not surprise Chad Moutray, chief economist for the National Association of Manufacturers.
"In short, surveys have suggested for much of the past months that manufacturing and overall business activity in the United States has stalled, and these numbers confirm that view," he wrote Friday on his blog at Shopfloor.org. "Today's numbers will embolden those who argue for new initiatives to stimulate economic growth."
Also troubling was that average hourly earnings for all employees on private nonfarm payrolls decreased by 3 cents, or 0.1 percent, to $23.09 in August. This decline followed an 11-cent gain in July.
Over the past 12 months average hourly earnings have increased by 1.9 percent, BLS said. This helps explain why consumers are saving or at least restraining their spending, as their earnings have failed to keep pace with inflation.
The number of unemployed Americans remained unchanged at about 14 million. About 6 million of them have been jobless for six months or longer.
The number of persons employed part time for economic reasons — sometimes called involuntary part-time workers — rose from 8.4 million to 8.8 million in August. These are people who are working part time because their hours have been cut back or they couldn't find full-time work.
The Morning Memo
The Morning Memo jump starts your day with weather, traffic and news
Career Center Blog