The Bureau of Labor Statistics reports the number of job cuts was less than forecast, but the unemployment rate jumped 0.3%
By BusinessWeek Staff and the Associated Press
The U.S. employment report for August contained one nugget of good news—and one unpleasant surprise. Payroll employment in the nonfarm economy fell 216,000 in August—below market expectations of a 225,000 decline—while the unemployment rate jumped 0.3%, to 9.7%, above the consensus forecast of a 9.5% rate.
Downward revisions lowered June and July employment by a combined 49,000, which "doesn't change the picture significantly," according to Standard & Poor's economists.
While the jobless rate rose more than expected, the number of job cuts is less than July's upwardly revised total of 276,000 and the lowest in a year, according to the Bureau of Labor Statistics.
If laid-off workers who have settled for part-time work or have given up looking for new jobs are included, the so-called underemployment rate reached 16.8%, the highest on records dating from 1994.
Goods-Producing Job Losses
"Although job losses continued in many of the major industry sectors in August, the declines have moderated in recent months," said the Bureau of Labor Statistics in its monthly release.
Job losses continued to be concentrated in the goods-producing industries, with manufacturing losing 63,000 jobs and construction down 65,000. Service industries lost 80,000 jobs, despite a 52,000-job rise in education and health services.
Elsewhere in the report, the average workweek was unchanged from the previous month, at 33.1 hours. Average hourly earnings rose 6¢ (0.3%), a bit more than expected, but still up only 2.6% from a year ago. The unemployment rate jumped 0.3%, to 9.7%, after dropping 0.1% in July. Teen unemployment rose the most, by 1.7%, to 25.5%.
"Close to Expectations"
"The report was close to expectations," said S&P economists in a Sept. 4 note. "The downward revisions could give a negative slant, but the ADP data [released on Sept. 2] had given markets some downward whispers" on the previous months' figures, added S&P.
The jobs report revealed "surprising wage-firmness in August that followed upward back-revisions, and a jobless-rate rise that…[re-established] its previously-expected upward trend," said Action Economics analysts in a Web site posting on Sept. 4. "[W]e view the current contraction rate for hours-worked as consistent with our 1.5% third-quarter GDP estimate, given the robust productivity gains of recent quarters."
"In short, the production-sensitive figures from the jobs report were almost exactly as expected, and have not altered our assumption of a small but positive economic growth rate in the current quarter," said Action Economics.