February 24, 2018
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Payrolls flat in August; unemployment remains at 9.1 percent

By Kevin G. Hall, McClatchy Newspapers

WASHINGTON — Another weaker-than-expected government jobs report Friday put new pressure on policymakers and the Federal Reserve to find ways to spark economic activity and boost hiring, experts said.

The economy added no new jobs on balance in August and the unemployment rate held steady at 9.1 percent, the Labor Department said.

Mainstream economists had been expecting payroll growth of 50,000 or greater, especially as the private ADP National Employment Report earlier this week reported 91,000 private-sector jobs added in August. The government report had just 17,000 private-sector jobs created on balance in August, while government payrolls were trimmed by the same number.

Investors reacted to the dismal August jobs report by selling stocks. The Dow Jones industrial average fell by more than 200 points in the first half hour of trading. Other U.S. and global stock indices were all off immediately by 2 percent or more.

Government statisticians also revised downward July and June hiring estimates by 32,000 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 Washington’s partisan head-butting 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, the 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.”

Policymakers instead are busy pointing fingers. President Barack Obama is scheduled next Thursday to outline his new plan to revive hiring and stave off recession. But even that got ensnared in partisan gamesmanship this week as the White House and House Speaker John Boehner, R-Ohio, fought over the time and date for the speech to a joint session of Congress.

The issue of jobs is front and center in the emerging 2012 presidential campaign, with several GOP candidates outlining their proposals or scheduled to do so in coming days. Republicans argue that government regulation is holding back employment, and they scored a victory Friday when the Obama administration backed off its plans to tighten anti-smog environmental rules.

Obama is expected to propose another year of a payroll tax holiday to boost consumer spending, along with a number of infrastructure measures to create demand and boost a construction sector hit hard by the protracted downturn in housing.

“As this report shows, the key issue holding back job growth is a lack of demand,” Heidi Shierholz, an economist with the liberal Economic Policy Institute, wrote in an analysis of the August jobs report.

The Federal Reserve has expanded its September policy meeting to a second day, now Sept. 20 and 21, to review possible next steps to support the troubled economy. Minutes from the last meeting show Fed governors deeply at odds over the path forward.

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 weren’t counted on payrolls during August, the 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: Seventeen thousand government jobs were lost. Since the peak of September 2008, roughly 550,000 government jobs have been cut.

There were a few bright spots in the report. Health care hiring 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 category 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,” the BLS said.

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. In the past 12 months, average hourly earnings have increased by only 1.9 percent, the 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 roughly 14 million. About 6 million of them — almost 43 percent — have been jobless for six months or longer.

The number of people 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 can’t find full-time work.

August jobs by the numbers:

—Government jobs, down 17,000.

—Retail, down 7,800.

—Construction, down 5,000.

—Manufacturing, down 3,000.

—Transportation and warehousing, down 2,400.

—Leisure and hospitality, up 2,000.

—Financial services, up 3,000.

—Temporary help services, up 4,700.

—Professional and business services, up 28,000.

—Health care, up 29,700.

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