Put some lipstick on this pig> Mortgage broker and telemarketer layoffs should start in earnest for Sept:
U.S. economy loses 93,000 jobs
Unemployment rate falls to 6.1% in August
By Rex Nutting, CBS.MarketWatch.com
Last Update: 9:53 AM ET Sept. 5, 2003
WASHINGTON (CBS.MW) -- The U.S. economy lost payroll jobs in August for the seventh month in a row even as the unemployment rate dipped to 6.1 percent, the Labor Department reported Friday.
Nonfarm payrolls shrank by 93,000 for the month, bringing the total job losses to 595,000 since January. The decrease in payrolls was the largest since March. Read the full report.
Economists had expected a small gain in payrolls, on the order of about 19,000, and had forecast that the jobless rate would hold steady at 6.2 percent.
"The August payroll report is extremely disappointing, as the labor market still gives no sign of stabilizing despite the marked improvement in economic activity over the last several months," said Jade Zelnik, chief economist at RBS Greenwich Capital.
"The employment report continued to paint a bleak jobs picture, out of step with other data pointing to a vigorous economic pickup," said Sherry Cooper, chief economist at BMO Nesbitt Burns.
The report fueled a strong rally in the bond market, where the yield ($TNX: news, chart, profile) on the 10-year note dropped 10 basis points from 4.51 percent to 4.41 percent. Shorter maturities rallied even more. See Bond Report. Meanwhile, U.S. stocks were broadly lower, with the S&P 500 index ($SPX: news, chart, profile) down 0.4 percent. See Market Snapshot.
The mid-month blackout that hit parts of the Northeast and the Great Lakes had little impact on payrolls, the government agency said, even though the outage occurred during the survey week.
Manufacturing firms cut 44,000 jobs, government axed 26,000 and professional services eliminated 28,000 jobs. Helping offset those declines, health services added 25,000 jobs, construction added 19,000 and temporary help services added 7,000 jobs.
Manufacturing firms have cut 2.7 million jobs over the past three years, including 431,000 this year.
"Job losses continued to be pervasive," said Kathleen Utgoff, commissioner of the Bureau of Labor Statistics.
The average workweek for August held steady at a record low 33.6 hours, with the manufacturing workweek steady at 40.1 hours. The total number of hours worked in the economy fell by 0.1 percent.
Average hourly wages rose by 2 cents, or 0.1 percent, to $15.45 an hour. Hourly wages are up 2.9 percent in the past year. Weekly wages rose 0.1 percent to $519.12.
Rate drop reflects dropouts
Meanwhile, the number of unemployed fell to 8.9 million last month from 9.06 million. About a fifth have been out of work longer than six months and half of them have been out of work longer than a year. To be counted as unemployed, one must be actively seeking work.
The employment report is based on two separate surveys. First, the government surveys 400,000 establishments to determine the level of payrolls, hours and wages. The agency also surveys about 60,000 households to determine the size of the labor pool, the unemployment rate and reasons for unemployment.
In the past several years, the two surveys have diverged, with the household survey showing overall job growth of 1.4 million since the recession ended in November 2001 even as the establishment survey reported more than 1.1 million jobs lost.
In August, for instance, the household survey showed employment rose by 147,000, in sharp contrast to the 93,000 jobs lost in the payroll survey.
While some economists suggest that the household survey provides a better view of the economy during turning points because it picks up new businesses, Utgoff said the payroll survey "provides more reliable information" because the sample is larger.
Even though the economy has strengthened, firms still aren't hiring. With strong productivity growth in the nation's economy and a greater reliance on imports than ever before, companies haven't needed to hire additional workers to meet demand from U.S. buyers.
Electoral implications?
Job growth could be the most important issue over the next year for the Federal Reserve, the White House and the electorate.
Few economists expect a dramatic improvement in the unemployment rate before the November 2004 elections. The consensus forecast sees the jobless rate slowly falling from 6.2 percent in July to 5.8 percent in December 2004.
Knowing that the voters retired his father because of their impatience with the jobless recovery in 1992, President Bush urged Congress to act quickly to help the private sector create jobs.
"I'm interested in Americans going to work," Bush said Thursday as he encouraged lawmakers to reduce health-care and litigation costs that impose barriers to hiring. He also called for action on energy, trade and taxes to boost the economy.
Democrats seeking to succeed Bush in the White House have said the administration's job growth record is the worst since Herbert Hoover's, and the subject came up during a debate among the party's presidential candidates late Thursday.
Since Bush took office, payrolls have shrunk by 2.56 million workers. It's the first time since the Great Depression that the economy failed to add jobs at this point in a recovery.
For the Fed, the decision about the course of interest rates could hinge on how fast some 9 million unemployed Americans are put back to work.
The Federal Open Market Committee would likely keep interest rates very low even during a robust economic recovery as long as unemployment remained high, influential Fed Gov. Ben Bernanke said Thursday. See full story.
"Ongoing productivity growth, together with stepped-up capital investment, may enable producers to meet expanding demand without substantially increased hiring in the near future, with the result that labor markets remain soft," Bernanke said.
If the expected growth doesn't create more jobs, "monetary ease" (meaning rate cuts) may be required, Bernanke said.
Rex Nutting is Washington bureau chief of CBS.MarketWatch.com. |
