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Unemployment rate unchanged in August

Friday, September 2, 2011 | 8:15 a.m. CDT; updated 10:43 a.m. CDT, Friday, September 2, 2011

WASHINGTON — Employers stopped adding jobs in August, an alarming setback for an economy that has struggled to grow and might be at risk of another recession.

The unemployment rate remained at 9.1 percent, according to the August jobs report released Friday. It was the weakest jobs report since September 2010.

Stock futures plunged on the news. In the 15 minutes after the report was released, Dow futures fell 94 points, from 11,401 to 11,318.

A strike by 45,000 Verizon workers lowered the job totals. Those workers are now back on the job.

The weakness in employment was underscored by revisions to the jobs data for June and July. Collectively, those figures were lowered to show 57,000 fewer jobs added. The downward revisions were all in government jobs.

The average work week also declined and hourly earnings fell by 3 cents to $23.09.

The report may dampen expectations for the economy to pick up in the second half of the year. With hiring stagnant and wages declining, consumers won't see much gain in incomes. That will limit their ability to spend, which undercuts economic growth. Consumer spending accounts for about 70 percent of the economy.

The economy needs to add roughly 250,000 jobs a month to rapidly bring down the unemployment rate, which has been above 9 percent in all but two months since May 2009.

In August, the private sector added 17,000 jobs, the fewest since February 2010. That compares with 156,000 in July and 75,000 in June.

Hiring fell across many different sectors. Manufacturers cut 3,000 jobs, its first decline since October 2010. Construction companies, retailers and transportation firms also cut workers.

The health care industry added 30,000 jobs last month.

Weak growth, a downgrade of long-term U.S. debt in early August and a sell-off on Wall Street likely kept some businesses from hiring.

The economy expanded at an annual pace of only 0.7 percent in the first six months of the year. That was the slowest six months of growth since the recession officially ended in June 2009.

Most economists forecast that growth may improve to about a 2 percent annual rate in the July-September quarter. But that's not fast enough to generate many jobs.

The economy's weakness was underscored Thursday by the Obama administration, which estimated that unemployment will average about 9 percent next year, when President Barack Obama will run for re-election. The rate was 7.8 percent when Obama took office.

The White House Office of Management and Budget projects overall growth of only 1.7 percent this year.

Next week, Obama will deliver a rare address to a joint session of Congress to introduce a plan for creating jobs and boosting economic growth.


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Comments

Michael Williams September 2, 2011 | 4:50 p.m.

Missourian: According to some posters (well, actually, only one), you should not be publishing such news.

It harms and creates fear among the impressionable.

Just thought you'd want to know. Your civic duty is to be optimistic even when there are no reasons for being so.

(Report Comment)
Darin Gilley September 5, 2011 | 12:06 p.m.

The Alliance for American Manufacturing has proposed a plan to revitalize the productive side of our economy. This plan would create American jobs, increase worker skills, and reducet both the trade and budget deficits.

Establish a National Infrastructure Bank to leverage capital for large-scale transportation and energy projects.
• Reshape the tax code in a revenue neutral way to provide incentives for job creation and inward investment. R&D tax credits should help firms that not only innovate in America, but make their products here. Lower tax rates for manufacturing activity in America, and eliminate tax shelters for hedge funds or financial transactions that have no real value.
• Apply "Buy America" provisions to all federal spending to ensure that American workers and businesses get the first shot at procurement contracts. (Nothing says "please, steal our jobs" like using subsidized Chinese steel in construction projects.)
• Shift some education investment to rebuilding our vocational and technical skills program, which would address looming shortages in the manufacturing sector.
• Refocus the trade agenda by giving American businesses new tools to counter China's currency manipulation, industrial subsidies, intellectual property theft, and barriers to market access.
• Condition new federal loan guarantees for energy projects on the utilization of domestic supply chains for construction.

Focusing on manufacturing will also lower our trade deficit, which will make it easier for America to pay its bills. But that's only half the story. There is plenty that President Obama could do on his own right now:

• Expedite small business loans through the Small Business Administration and Treasury Department to help firms expand, retool, and hire.
• Convene a multilateral meeting to address global imbalances, and in particular Chinese mercantilism. If China doesn't agree to participate, designate it a currency manipulator. (China ships fully one-third of its exports to the U.S. and finances less than 10 percent of our public debt, so we have more leverage than some might suggest.)
• On the heels of the landmark agreement with automakers on fuel economy standards, secure an additional agreement from all foreign and domestic car companies to increase their levels of domestic content by at least 10 percent over the next three years.
• Direct the Department of Defense to leverage existing procurement to contractors that commit to increasing their domestic content of our military equipment, technology, and supplies.
• Approve additional applications for renewable and traditional energy projects, contingent on the use of American materials in construction.

(Report Comment)

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