Job Growth at Halt in U.S. - Worst Showing in 11 Months

The flat performance was down sharply from a revised 85,000 gain of jobs in July, the Labor Department said Friday, and was far below a consensus forecast by economists of 60,000 new jobs. The unemployment rate stayed constant at 9.1 percent in August.

The nonfarm payrolls numbers were unchanged after a prolonged increase in economic anxiety in August that began with the brinksmanship in Washington’s debt-ceiling debate, followed by the country’s loss of its triple-A credit rating, stock market whiplash and renewed concerns about Europe’s sovereign debt.

Wall Street stocks promptly lost more than 2 percent of their value at the opening of trading. The Dow Jones industrial average fell 210 points Friday morning to 11,280.07.

The jobs figure, a monthly statistical snapshot by the Department of Labor, appears slightly more negative than it is because it does not include 45,000 Verizon workers who were on strike when the survey was taken but who will reappear in next month’s report.

Economists blamed both sluggish demand for goods and services and the heightened uncertainty over the economy’s direction for the slow pace of job creation, saying political deadlock was in effect creating economic paralysis.

“Business confidence surveys have uniformly pointed to businesses who are not laying off workers, but who are holding off on hiring while they wait for a clearer outlook — an outlook that became much cloudier and more volatile” beginning with the debt-ceiling battle in July, said Ellen Zentner, the senior United States economist for Nomura Securities.

Government continued to shed jobs, but the bulk of the loss was in local government, which lost 20,000 positions. State government actually posted a gain of 5,000 jobs.

Two of the bright spots in the economy over the last year, manufacturing and retail, lost steam, falling by 3,000 and 8,000 jobs, respectively. The health care sector added 29,700 jobs in August.

The number of long-term unemployed — people out of work for 27 weeks or more — remained about the same as in July, at 6 million, as did the median duration of unemployment, at 19.6 weeks compared with 19.7 weeks in July.

The general unemployment rate, which counts only people who looked for work in the previous four weeks, held steady at 9.1 percent. But a broader measure that includes people who have looked for work in the last year and people who were involuntarily working part-time instead of full-time, fell to 16.1 percent from 16.3 percent. The percent of working-age adults who were employed, already at its lowest rate since 1983, ticked down from 58.6 percent to 58.5 percent.

While there is still a chance that the United States can slip into a double-dip recession, many economists believe that the economy will stay in growth mode, albeit at levels barely perceptible, much less comforting, to Americans without jobs.

“We’ve got at least another 12 months of difficulty to go through,” said Steven Ricchiuto, United States economist for Mizuho Securities USA. “I know that doesn’t help politicians who are worried about the elections.”

The poor showing is likely to be seized on by President Obama in his prime-time address to Congress on Thursday as proof that bolder government action is needed to create jobs.

There is considerable skepticism that any ambitious plan to bolster job growth would be politically feasible. But several economists said that given the fragility of the recovery, the payroll tax cut and extended unemployment benefits, both set to expire at the end of the year, should be renewed.

“It’s probably not the time for adding to fiscal drag,” said Jim O’Sullivan, the chief economist for MF Global. He said that together the tax cut and unemployment benefits account for 1 percent of the gross domestic product.

Some analysts downgraded their forecast for the jobs numbers on Thursday based on new economic indicators including weaker online job advertising, a rise in announced layoffs and a growing pessimism about the job market by consumers. A major report on manufacturing showed slowing employment growth and shrinking production and new orders.

But other indicators suggested that fears of recession have outstripped reality. Consumer confidence dropped sharply and pending home sales dipped, but in July retail sales increased and orders for durable goods — expensive items often purchased on credit — were up 4 percent. On the other hand, a report on chain-store sales indicated slack back-to-school shopping, further slowed by Hurricane Irene.

via nytimes.com