"The economy added 96,000 jobs in August, well below expectations. The unemployment rate fell to 8.1% from 8.3%, but only because 368,000 Americans dropped out of the labor force, not because more people found work. Economists are still digesting the report, but five things jump out right away:
1. Fewer jobs were created in June and July than previously thought.
The Labor Department revised its estimate for June job creation to
45,000 from 64,000 and in July to 141,000 from 163,000, a combined
reduction of 41,000 jobs. The economy has added an average of 97,000
jobs over the past six months, the first time the six-month average has
dropped below 100,000 since January of 2011.
2. The industry breakdown was uneven.
Manufacturing, a key source of strength earlier in the recovery, lost
15,000 jobs, with payrolls falling even in the seemingly robust auto
sector. Construction employment was basically flat, despite signs of a
rebound in the housing market. Government payrolls fell yet again, and
temporary hires — often seen as a bellwether of future hiring — fell for
the first time since March. But other sectors did better: Retailers
added 6,000 jobs, restaurants hired 28,000 workers, and the health-care
industry notched another big gain of close to 17,000 jobs.
3. More job-seekers are giving up.
The number of people in the labor force — those working or looking for
work — fell by 368,000. Nearly 3 million people who were unemployed in
July were out of the labor force in August, suggesting they quit looking
for jobs. By comparison, just 2.3 million people went from being
unemployed in July to working in August.
4. The long-run trend still holds.
As bad as today’s report is, it’s too soon to call a major shift in the
labor market. The Labor Department’s preliminary data are subject to
big revisions and have a margin of error of about 100,000 jobs, meaning
the “real” number of jobs created in August could be significantly
better — or worse — than today’s report suggests. Moreover, over the longer term
the economy is still adding about 150,000 jobs per month; in fact, the
12-month average for payroll gains actually ticked up slightly in
August.
5. Fewer people are working.
Payrolls, which are based on a survey of businesses, rose slightly. But
in the separate survey of households, the number of people reporting
they were employed fell by 119,000 in July. The share of the population
that’s working — the employment-to-population ratio — ticked down a
tenth of a percentage point to 58.3%. But in a positive sign, the number
of people working full-time rose slightly, and the number of people
reporting they were working part-time because they couldn’t find
full-time jobs fell by 215,000."
Summing Up
We've warned to beware of the "feigned precision" contained in official government reported jobs numbers previously, so please don't bet the ranch on the accuracy of today's report. Maybe $1 but not the ranch.
That said, things are tough and conditions aren't getting appreciably better on the jobs front and aren't likely to anytime soon.
The mud slinging presidential campaign undoubtedly adds to the uncertainty and uneasiness among our fellow Americans.
So look for more of the same in future months as consumers remain reluctant to spend and businesses remain reluctant to hire, and politicians play word games.
Our American private sector and individual "animal spirits," while by no means dead, aren't evident as the politicians continue to play the finger pointing, blame spreading game.
I have a suggestion for them. If We the People will absolve them of any blame for the fix we're in, will they step aside and quit kicking the private sector jobs creators in the head?
Now that would be a bargain worth making.
Thanks. Bob.
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