OK, it’s the first Friday of the month, time for the unemployment numbers.
The headline number was an increase in the unemployment rate to 9.7% from 9.4% in July. The number of jobs lost was 216,000 which marks a continuing improvement in that area but the number of jobs lost in June and July was revised upwards by 49,000, so that tempers things a bit. U-6 the broader measure of unemployment increased from 16.3% to 16.8% which is a bigger jump then in the base rate — not a particularly good sign.
The bottom line is things are just getting worse more slowly, but you do have to stop the bleeding before you can recover. There was some talk that the increase in the rate was brought about by more workers coming back into the market as they perceive conditions improving. The labor force participation rate held steady last month so this wouldn’t appear to actually be occurring.
From the WSJ Real Time Economics blog, some economists views:
- Arguably the most disheartening feature of this employment report was the 0.3% jump in the unemployment rate to a 26-year high of 9.7%. That essentially confirmed suspicions that surprising decline in July was largely a statistical aberration. On a slightly more encouraging note, the average and median duration of unemployment improved, largely the result of back-to-back declines totaling some 624k in the number of people unemployed for 15 to 26 weeks. This indicates that most of the sharp drop in the number of people continuing to collect weekly jobless pay was the result of workers returning to work rather than running out of benefits. If that develops into a trend, overall employment gains should soon follow. –Nomura Global Economics
- The rising unemployment rate (a lagging indicator) was expected with a sharp rise in teenage unemployment expected after the minimum wage was increased in July. The unemployment rate for college-educated workers remained at 4.7% while the unemployment rate for less than high school diploma workers rose to 15.6%. In a labor market driven by the demand for skilled workers, especially in the service sector, this month’s employment report should not be a surprise to anyone. Cyclical recovery in the economy is faced with structural challenges in the labor market. –John Silvia, Wells Fargo
- The moderation in the pace of job loss during August largely reflected a sharp jump in the health care category and a moderation in the pace of job loss in the retail sector. These positive developments were partially offset by a shaper decline in manufacturing employment… Employment in the motor vehicle assembly plants fell 15,000 in August on the heels of a 28,000 rose in July. Many of the auto factories that are typically shuttered for retooling during the July survey period were actually up and running this year. The seasonal adjustment factors anticipate that the auto employees who are usually out of work in the July survey will return in August. But since many of these people remained on the job in July, there wasn’t nearly as much of an incremental rise in the raw number of workers in August of this year. We believe there was an artificial boost of 30,000 or so to July payrolls from seasonal factors trying to account for temporarily laid off workers who weren’t in fact laid off this year, and this effect was fully unwound in August. –David Greenlaw, Morgan Stanley
- The continued moderation in the pace of job losses does offer some encouragement on the state of the U.S. labor market. Nevertheless, with the soft economic backdrop, we are likely to see further job losses in the coming months as U.S. businesses continue to adjust their payrolls in the face of weak demand, which will likely limit the extent to which consumer spending can be depended upon to power the eventual recovery. It is important to note, however, that the labor market is generally a lagging indicator of economic activity –Millan L. B. Mulraine, TD Securities
- Job losses continued in August but the good news is that the cut backs are on a clearly declining trajectory. After peaking at over 740,000 in January, the rush to restructure workforces has slowed just about every month. Also, the percentage of industries posting job increases was the highest in a year. One note of caution, though: Previous declines were revised upward by nearly 50,000, which raises the question what this drop will look like once the next round of data are released. –Naroff Economic Advisors
- The report shows the divergence between the ‘haves’ and the ‘have nots’ in this economy—with average hourly earnings rising 0.3% in each of the last two months, labor income is rising at a solid pace for those with jobs while the near 25-week average duration of unemployment underscores how long it takes to find a new job for those who are unemployed. –RDQ Economics
- One slight fly-in-the-ointment for this jobs report was the household survey, which is an alternative, and some would argue, more reliable measure of employment than the non-farm payrolls numbers. This showed a 392 thousand decrease in employment, worsening from a 155 decline in July. But even here, the trend in job losses seems to be abating. We do not expect to see positive jobs growth before next year, and it will probably be another 2 quarters before the unemployment rate peaks. An unemployment rate of 11 or more is likely to be seen before it finally heads slowly down starting the second half of 2010.–Rob Carnell, ING Bank
- Whether or not today’s and other recent reports overstate the case, the improving trend of the labor market after the autumn/winter carnage cannot be denied. What is still very much open to question is how fast the move will be to stabilization of payrolls and eventually to job growth. We continue to believe that the process will be a slow one, and that households will be contending with weak income growth and balance sheet issues for some time. –Joshua Shapiro, MFR Inc.
- An interesting side note to the August data is the loss in government jobs. While the Federal government is trying to its part it is being more than offset by job losses in the Post Office and in state & local governments. By most measures, the pace of layoffs in the private sector is declining. –Steven Blitz, Pangea Market Advisory
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