Jobs Data Provide Hope although recover is slower than past cycles

Jobs Data Provide Hope although recover is slower than past cycles.

By CONOR DOUGHERTY

"The U.S. economy lost jobs for the third month in a row in August, but modest hiring by the private sector eased concerns the economy might be tumbling back into recession.


The U.S. economy shed jobs for a third straight month, losing 54,000 non-farm jobs, but the losses were half as bad as expected. The unemployment rate rose to 9.6%. Kelly Evans, Dennis Berman, Paul Vigna, Phil Izzo and Sudeep Reddy discuss. Also, Jerry Seib discusses what has happened to the American job creation machine.

Private-sector employers added 67,000 jobs on a seasonally adjusted basis, the Labor Department said Friday. Overall, nonfarm payrolls fell by 54,000, as the U.S. shed 114,000 temporary Census workers and state governments also reduced employment.

The jobs report was consistent with other recent economic reports, including a strong factory report earlier this week, that show the economy continues to recover, though at a painfully slow rate.

The unemployment rate ticked up to 9.6% from 9.5% in July, not because of layoffs but because more people entered the work force. Some 14.9 million people remain jobless, and the unemployment figure marked the 16th straight month above 9%, the longest stretch in a quarter-century.

That promised to keep the pressure on Democrats in Congress as midterm elections approach, with Republicans pressing the case that the party that dominates both Congress and the White House isn't getting Americans back to work.

President Barack Obama said the report was "not nearly good enough," and called on Congress to pass a bill designed to help small businesses get loans. On the GOP side, House Republican Leader John Boehner of Ohio said, "A year that began with Americans bracing for a jobless recovery has instead turned into a full-blown search for both jobs and a recovery."

Investors, some of whom have grown worried that the recovery could be stalling out, reacted positively to the jobs report, pushing the Dow Jones Industrial Average up 127.83 points, or 1.24%, to 10447.83. Though the number of private-sector jobs created trailed July's, it was better than expected by the consensus of economists.

The stock rally capped one of the market's best weeks of the year as economic numbers, including reports Wednesday suggesting better-than-expected manufacturing activity in the U.S. and China, put bears on the defensive. A U.S. manufacturing index from the Institute for Supply Management, which surveys purchasing managers, rose to 56.3 in August from 55.5; a decline had been expected.

The report showing modest private-sector hiring took some pressure off the Federal Reserve for quick action to address the slow recovery. Fed officials have been considering whether they need to do more to stimulate growth, such as by trying to drive down long-term interest rates through purchases of long-term Treasury bonds. Most economists still consider it extremely unlikely the U.S. economy will slip back into recession, and Friday's report reassured many that the recovery, however weak, would continue.


Atlas Energy Inc. is among those doing some hiring. The natural-gas producer, based in Moon Township, Pa., has added 160 workers this year, bringing its head count to 680.

The company recently played host to a jobs fair at a Pittsburgh-area hotel, where a line to register spilled out of a ballroom and into the lobby. "It's sobering to see the number of people who don't have a job," said Jeffrey Kupfer, an Atlas senior vice president.

Most of the private-sector job gains in August were in the service sector, a broad category that includes everything from insurance brokers to nail-salon workers. Professional and business services added 20,000 jobs. Education and health services, which have held up better than any other sector, added 45,000 over the month.

A separate report Friday showed the service sector's growth slowing in August. The ISM said its index of nonmanufacturing industries was at 51.5 last month. That was down from the 54.3 in July, but, because it was over 50, still showed the sector expanding.

U.S. manufacturing shed 27,000 jobs in August, according to the Labor Department, ending a long streak of job gains by the factory sector. Much of that was due to losses in the automotive industry.

A positive sign was that the percentage of workers out of a job for six months or longer, the so-called long-term unemployed, declined for the third straight month.

And Friday's report showed temporary-help services added 16,800 jobs in August, after a flat July. Growth in that sector is often a precursor to companies adding permanent positions. Still, the slow pace has some economists worried that the job market continues to flounder.


Lawrence Katz, a Harvard economics professor, said the economy would need to add roughly 300,000 jobs a month to reduce the unemployment rate to pre-recession levels within four years.

He said Friday's report portrays a job market still in neutral, amid a recovery fueled largely by federal stimulus and inventory restocking.

"It looks like an economy that got a burst of stimulus and it's wearing off," Mr. Katz said. "The labor market isn't bleeding jobs like it did late 2008 and late 2009, but it's certainly not recovering at a rate that would do anything to...
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