WASHINGTON -- U.S. employers added 96,000 jobs last month, a weak figure that could slow the momentum President Barack Obama hoped to gain from his speech Thursday night to the Democratic National Convention.
The unemployment rate fell to 8.1 percent from 8.3 percent in July. But that was only because more people gave up looking for jobs. People who are out of work are counted as unemployed only if they're looking for a job.
(SCROLL DOWN FOR LIVE UPDATES ON THE JOBS REPORT)
The government also said Friday that 41,000 fewer jobs were created in July and June than first estimated. The economy has added just 139,000 jobs a month since the start of the year, below 2011's average of 153,000.
Dow Jones industrial futures, which had been up before the report, fell soon after it was released but then bounced back. And the yield on the benchmark 10-year Treasury note tumbled to 1.63 percent, from 1.73 percent. That suggested that investors see a slow economy resulting in more demand for low-risk investments like U.S. Treasurys.
Friday's report was discouraging throughout. Hourly pay fell, manufacturers cut the most jobs in two years and the number of people in the work force dropped to its lowest level in 31 years.
The sluggish figures make the Federal Reserve more likely to unveil a new bond-buying program at its meeting next week to try to lift the economy, said John Silvia, chief economist at Wells Fargo. The goal of the bond purchases would be to lower long-term interest rates to encourage borrowing and spending.
"This weak jobs report is going to feed into their argument that the economy is growing at a sub-par pace," Silvia said.
The report provided fodder for both presidential candidates. Soon after the report was issued, Republican nominee Mitt Romney pointed to 43 straight months in which unemployment has now exceeded 8 percent.
"President Obama just hasn't lived up to his promises, and his policies haven't worked," Romney said in a statement.
At the same time, the report marks the 30th straight month of private-sector job gains, a point Obama and his allies are certain to spotlight.
Friday's jobs report is among the most politically consequential of the campaign. The figures arrive as the presidential race enters the final two months before Election Day. Jobs are the core issue, and the report could sway some undecided voters.
There will be two additional employment reports before the election. But by then, more Americans will have made up their minds.
In his speech Thursday night, Obama acknowledged incomplete progress in repairing the still-struggling economy and asked voters to remain patient.
"The truth is, it will take more than a few years for us to solve challenges that have built up over the decades," Obama said.
Jim O'Sullivan, chief U.S. economist at High Frequency Economics, noted that hiring has improved slightly in the past two months. Job gains averaged 119,000 in July and August, up from an average monthly gain of 67,000 in the April-June quarter.
"There's no sign of momentum fading," he said. "That said, it's not much better. ... What you're left with is an economy that's still growing, but pretty modestly."
In addition to those who've given up looking for work, many young Americans are avoiding the job market by remaining in school. All told, the proportion of the population that is either working or looking for work fell to 63.5 percent. That's the lowest level in 31 years for the labor force participation rate.
Average hourly wages dipped a penny to $23.52 and are only slightly ahead of inflation in the past year.
The average work week was unchanged in August after being revised downward in July to 34.4 hours. And the number of temporary jobs fell for the first time in five months. Both figures suggest that companies are seeing less demand for their services and need fewer workers.
Many of the jobs were in lower-paying industries such as retail, which added 6,100 jobs, and hotels, restaurants and other leisure industries, which gained 34,000. Higher-paying manufacturing jobs fell by 15,000, the most in two years.
The weak pace of hiring is the latest sign that businesses are reluctant to make big investments or add more workers. Europe's financial crisis has pushed the region's economy to the edge of recession. And a set of tax hikes and spending cuts scheduled to take effect at the beginning of the year have created uncertainty about future growth.
No president since Franklin D. Roosevelt during the Great Depression has been re-elected with a jobless rate over 8 percent. This year's election will likely turn on whether voters see the economy as improving or remaining stagnant or getting worse under Obama.
That was the headline of JPMorgan chief U.S. economist Michael Feroli's research note on the jobs report. But this was his most depressing line: "Once one takes account of population growth there has been essentially no progress in repairing the labor market after the recent downturn."
Here's a longer excerpt:
The more comprehensive employment-to-population ratio ticked down to 58.3%; this measure is a mere 0.1% above its cycle trough, indicating that once one takes account of population growth there has been essentially no progress in repairing the labor market after the recent downturn. In fact, if you go through the details it's hard to find any redeeming aspects to this jobs report. In terms of the broader economy, today's numbers should check any enthusiasm that the economy was gaining momentum toward the end of the summer. Instead, the economy appears to remain stuck in the mud. The weak pace of labor income growth will likely limit the pace of consumer spending, which in turn means continued unsatisfactory GDP growth.
From Dean Baker, co-director of the Center for Economic and Policy Research:
The restaurant sector continued to show robust job growth, adding 28,300 jobs. This unusually strong growth can be used to clear up some confusion in news accounts about the nature of the jobs being created in the recovery. A disproportionate share of new jobs have been in low-paying sectors. This should be expected. The quality of jobs is in part a function of the quantity. When the unemployment rate is low, there are still bad jobs being created, but they just go unfilled.
From Michael Gapen, senior U.S. economist at Barclays Capital:
The softness in employment relative to our expectation mainly came in goods-producing sectors, which fell 16k on the month and was driven by a 15k decline in manufacturing employment. Manufacturing had posted gains in 10 of the 11 prior months and we believe the slowdown in exports from a softer global growth backdrop was the likely culprit in holding back hiring in the manufacturing sector. The softness in manufacturing payrolls is consistent with the generally softer incoming data on exports, the ISM manufacturing survey, and the industrial production report.
From John Silvia, chief economist at Wells Fargo Securities:
In August, average hourly earnings for all workers were up just 1.7 percent compared to a year earlier and just 1.3 percent for production workers. Meanwhile, the unemployment rate declined to 8.1 percent in August, primarily due to a decline in the labor force. Certainly, the decline in the unemployment rate reflects, in part, the drop in the participation rate, but what is interesting is that declines in the unemployment rate have traditionally been associated with rises in average wage gains....
Since the unemployment rate peaked in 2010, the decline in the unemployment rate has actually been accompanied by a drop in average wage gains. This pattern suggests a different structure of wage setting in the U.S. labor market. In part, benefit compensation has risen as an offset to wage growth, as workers seek to protect their benefits in an uncertain world.
From Nigel Gault, chief U.S. economist at IHS Global Insight:
Since Fed Chairman Bernanke identified the labor market as a "grave concern" in his recent Jackson Hole remarks, today's weak report should seal the deal for more easing from the Fed on September 13. We expect the Fed to extend its "low-rates" guidance through mid-2015, and to launch a QE3 program of asset purchases (concentrated on mortgage-backed securities) worth $500-600 billion. We don’t think these measures will be very effective in boosting growth, but for the Fed it's a question of trying to do what it can.
|@ npohorski : @huffpostmoney I made a big move from LA to WI the first week in August and started a new job two weeks ago! #jobstories|
|@ billmcneely : @bkavoussi @HuffPostBiz Having a #veteran at a GI Jobs Top 100 friendly firm tell me they don't want to take the time to train me|
Are you looking for a job, working part-time, working in a job that doesn't use your skill-set or working long hours for less pay than you deserve? Tell us about your recent experiences in the job market on Twitter with the hashtag #jobstories.
|@ aicel_cravespr : @HuffPostBiz #jobstories Graduated Cum Laude w/PR degree, have applied to 200+ jobs, so far 2 calls back - for internships. Unpaid. #smh|
From a research note from Paul Ashworth, chief U.S. economist at Capital Economics:
Despite all this weakness, the unemployment rate actually fell back to 8.1% last month, from 8.3%. But this was only because the labour force contracted by a massive 368,000, which dwarfed the 119,000 decline in the household survey measure of employment. Under those circumstances, it is hard to characterise the drop in the unemployment rate as any sort of good news.
|@ ArthurDelaneyHP : Average unemployment duration 52.7 weeks for workers 55+ …. yuck|
Nigel Gault, chief U.S. economist at IHS Global Insight, points out in a research note that the overall economy still is struggling:
There has been a continuing improvement in housing indicators, and we have had better news from both jobs and consumer spending to start the third quarter. But some of the drivers that were previously supporting growth—exports and business fixed investment—are showing signs of flagging in the face of global economic headwinds and domestic policy uncertainty. As a result, manufacturing has at least temporarily run out of steam, and overall growth in output and employment is likely to remain at only a modest pace.
From Jim O'Sullivan, chief U.S. economist at High Frequency Economics:
The net result is still somewhat faster employment growth so far in Q3 --119k per month -- than the 67K per month in Q2. Combined with other data, including claims and the ISMs, we believe the trend is still at least strong enough to prevent the unemployment rate from rising, and if anything momentum has been up a little again, although that is clearly not good enough from the Fed's perspective. The data will encourage the FOMC to act again at next week's meeting.
From Austan Goolsbee, economics professor at the University of Chicago and former economic adviser to President Obama:
|@ Austan_Goolsbee : folks, chill: 3 mo trend is far less noisy than 1 month: this mo mediocre, last mo good, mo before bad. avg is modest, consistent w/GDP|
In a statement on the jobs report, Alan Krueger, chairman of the White House's Council of Economic Advisers, subtly criticized Congress for not passing President Obama's economic proposals:
To create more jobs in particularly hard-hit sectors, President Obama continues to support the elements of the American Jobs Act that have not yet passed, including further investment in infrastructure to rebuild our Nation’s ports, roads and highways, and assistance to State and local governments to prevent layoffs and to enable them to rehire hundreds of thousands of teachers and first responders. To build on the progress of the last few years, President Obama has also proposed an extension of middle class tax cuts that would prevent the typical middle class family from facing a $2,200 tax increase next year.
From a research note by Joseph Brusuelas, senior economist at Bloomberg LP:
From an economic perspective, the decline in the unemployment rate is insignificant. It occurred due to 368,000 individuals that left the workforce and the labor force participation rate fell to 63.5%, the lowest since 1981.
Paul Ryan, the Republican Party's vice presidential nominee, is blaming supposed government overspending and business uncertainty for the jobs crisis on CNBC right now.
"This is not even close to what a recovery looks like," Ryan said. "We are limping along. This is stagnant growth."
Ryan said that to increase economic growth, the government needs to "clean up the spending problem in Washington to prevent a debt crisis."
Heather Boushey, senior economist at the Center for American Progress Action Fund, just issued the following statement:
August marked the 30th straight month of private-sector job gains. Over that time the economy has added more than 4.6 million private-sector jobs but has shed nearly 600,000 government jobs, which has worked against economic recovery. With the fiscal cliff looming at the end of the year and Europe teetering on recession, employers need to see Republican leaders in Congress step up and act to boost employment, rather than acting as they have been by paring back spending before the economy has fully recovered.
|@ ReformedBroker : 31 Year Low in Labor Force Participation Rate and 'Tonight Show' Watchability|
Ezra Klein, economics blogger and columnist at the Washington Post, echoed Paul Krugman's earlier point: Job growth is just barely keeping up with population growth.
|@ ezraklein : 5. Also note that we need around 90-120k jobs to keep up with population growth. So we're barely breaking even this month.|
From David Leonhardt, Washington bureau chief of the New York Times:
|@ DLeonhardt : ... the economy would have about 2m more jobs if govt had added jobs as in 80s rather than cut them in this slump. http://t.co/6Nsb4VPM|
From Teresa Kopec:
|@ TeresaKopec : For some reason I'm still not convinced giving Kim Kardashian a bigger tax break will turn these jobs numbers around. #RomneyPlan|
From Jeffrey Sparshott, economic policy reporter at Dow Jones and the Wall Street Journal:
|@ jeffatdowjones : Drinking sorrows away? Employment in food services and drinking places +28K in August and +298K over the past 12 months.|
As we have previously noted, this is not a very good sign, since food service jobs pay notoriously little: $18,130 per year on average in 2010, according to the Labor Department. Low-wage work generally has been replacing middle-wage work during the economic recovery, which could create a self-reinforcing cycle of less income and less spending to go around.
There were 1.8 million Americans jobless 99 weeks or more in August, compared with 2 million in August 2011, according to unpublished Labor Department data. The numbers are not seasonally adjusted, so economists advise year-to-year comparisons instead of month-to-month comparisons.
Republican presidential nominee Mitt Romney just issued the following statement:
If last night was the party, this morning is the hangover. For every net new job created, nearly four Americans gave up looking for work entirely. This is more of the same for middle class families who are suffering through the worst economic recovery since the Great Depression. After 43 straight months of unemployment above 8%, it is clear that President Obama just hasn't lived up to his promises and his policies haven't worked. We aren’t better off than they were four years ago. My plan for a stronger middle class will create 12 million new jobs by the end of my first term. America deserves new leadership that will get our economy moving again.
Dylan Matthews, a reporter for the Washington Post's Wonkblog, has five good charts describing today's jobs report. Check them out here.
From Paul Krugman, the New York Times columnist and Nobel Prize-winning Princeton economics professor:
The best hypothesis about the US economy this past year and more is that it has been steadily adding jobs at a pace roughly fast enough to keep up with but not get ahead of population growth. Today’s report was consistent with a continuation of that story. Nothing to see here.
From Washington Post economics reporter Zachary Goldfarb:
|@ Goldfarb : Unemployment by education: No HS degree (12%), HS grad (8.8%), some college or assoc (6.6%) and college (4.1%).|
From Justin Wolfers, economics professor at the University of Michigan:
|@ justinwolfers : My goodness, we're still shedding public sector jobs? Wow.|
From Joe Weisenthal, deputy editor at Business Insider:
|@ TheStalwart : CHART OF THE DAY: Labor Force Participation Falls To Its Lowest Level Since 1981 http://t.co/sO6eqAp8|
Weisenthal noted that the labor force participation rate now has fallen to its lowest level since September 1981.
In May, the labor force participation rate fell to its lowest level since December 1981. Now it's even worse.
|@ joebrusuelas : When accounting for net revisions to previous estimates, the total change in employment was 55,000. This will most surely move the Fed $$|
10. The Boeing Company
9. Caci International
8. Computer Sciences Corporation (CSC)
7. BAE Systems
6. United States Department of Defense
5. Lockheed Martin
4. L-3 Communications
photo by <a href="http://www.flickr.com/photos/rdecom/5535590528/" target="_hplink">RDECOM</a>
3. Northrop Grumman
2. Science Applications International Corporation (SAIC)
1. Booz Allen Hamilton
photo by <a href="http://www.flickr.com/photos/e2conf/6351941238/" target="_hplink">Enterprise 2.0 Conference</a>