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Economists and others weigh in on the drop in total nonfarm payrolls and rise in the unemployment rate.
—It is a sigh of relief. The labor market in August was lethargic, but better than feared reducing the fears of a double-dip recession. Private payrolls went up 67,000 even though the overall nonfarm payroll fell 54,000 due to the census layoff. –Sung Won Sohn, Smith School of Business and Economics
–The August employment report confirms the “Big Stall” rather than outright contraction in the economy… Saying the economy isn't about to contract is not, unfortunately, the same thing as saying that growth momentum has returned. If anything, a read into the details of the report indicates the extent of the economy's stall. The growth in private payrolls was confined to Healthcare & Social Assistance (which seems to go up every month regardless), temp workers plus construction — of which 10,000 of the 19,000 were returning strikers. Everything else summed to zero and all of these sectors reported numbers that were marginally on one side or the other of zero. –Steven Blitz, Majestic Research
–The soft patch for jobs may have been extended for a fourth month today, but momentum in the economy is building and we can rule out a double-dip. –Christopher Rupkey, Bank of Tokyo-Mitsubishi
–Government employment losses in August more than offset the gains in private-sector employment. Most of the drop in public-sector payrolls is explained by the departure of 114,000 temporary Census workers. However, state and local government payrolls also continued to shrink in August. Since the start of this year state and local public-sector payrolls have fallen 135,000, or almost 17,000 per month. These job losses are almost certainly linked to the expected end of federal fiscal relief under the Administration's stimulus program. –Gary Burtless, Brookings Institution
–Nonfarm [private] payrolls expanded by 67,000 in August? 67,000 jobs is just not enough and it cannot be spun otherwise. At the same time, the economy does continue to add a modest amount of jobs — since December 2009, private employment has increased by 763,000 jobs. This is not enough, especially so given the 8+ million jobs shed during the recession, but it is something. Given the increase in corporate profits among U.S. corporations, ongoing gains in payrolls should not be surprising. –Dan Greenhaus, Miller Tabak
–In August, job creation occurred across a number of sectors, including health care, construction, mining, and temporary help services for professional and business services. Despite the decline in total jobs, this report was mildly positive, as private sector jobs helped alleviate some of the Census losses. A recovery is clearly underway, although it will be a slow one for the job market. –Jason Schenker, Prestige Economics
–Construction employment registered an uptick for the first time since April. The nonres category accounted for all of the gain. This may be related to a ramping up of infrastructure projects. Manufacturing employment fell for the first time since December but this reflected a seasonal unwind of the rise in auto industry jobs that was evident in July. Moreover, the average workweek in the manufacturing sector ticked up 0.1 hours, so we see a manufacturing activity excluding motor vehicles up a sharp 0.8% in August –David Greenlaw, Morgan Stanley
–Private payrolls increased by 67,000 last month, down from 107,000 in July. However, that apparent slowdown may just be an illusion. Employment at vehicle manufacturing plants jumped by 22,000 in July and then fell back by exactly the same amount in August. We suspect this is a distortion caused by the unusually small number of plant shutdowns this summer. Strip that out and private employment growth actually pick up a little bit last month. –Paul Ashworth, Capital Economics
–It looks like the momentum in employment has been roughly steady in recent months at a modest pace that will not be enough to hold the unemployment rate steady. At current rates of labor force participation, the economy needs to generate 100,000 jobs to hold the unemployment rate steady. –Julia Coronado, BNP Paribas
–Viewed in isolation, a 67,000 private payroll increase this far into the recovery is very poor. But viewed against low expectations and against fears that the economy may be tumbling into a double-dip recession, today’s report is good news. It suggests that the recovery may be wobbly but that it is still staggering forward. –Nigel Gault, IHS Global Insight
– The fact that the labor market did not stall in August as many had feared suggests the recovery is sustained, if not robust. The increase in temp hiring suggests that employers, while suspicious about the strength of demand, see orders strong enough to justify taking on more help. The most recent Challenger report also suggests that companies have cut payrolls so deeply that any increase in demand will require more hiring. Businesses have squeezed as much as they can from their current workforces; once the economy gains some momentum, more permanent hiring is sure to follow. –Sophia Koropeckyj, Moody’s Economy.com
–Not a double dip, but still pretty anemic. So, stronger-than-expected, yes. Strong, no. –Stephen Stanley, Pierpoint Securities
–The small amount of job gains during the past few months not only reflects the response to slow output growth, but also a lack of confidence going forward. While this expansion might seem similar to recent post-recession periods, it is in fact much different. The economy as a whole has been weakened by a dismal housing market and slow consumption, which especially hamper small and medium- sized enterprises. Modest gains in private sector jobs, coupled with the large decline in government employment, are consistent with our forecast for continued sluggish growth. –Bart van Ark, The Conference Board
–The labor market has entered a holding pattern. After relatively mild improvements earlier this year, the key indicators of the strength of the labor market have shown virtually no improvement in recent months. The private sector has added an average of 78,000 jobs each month for the past three months, not nearly enough to begin to reduce unemployment. –Heather Boushey, Center for American Progress
–Hourly earnings post their biggest rise since January of this year at 0.3% month-over-month, this translates into a 1.7% month-over-month in wages. Hours worked which are still low remained at 34.2; we would look for this to improve further before we started to see any real aggressive in additions to payrolls. Temporary help also resumes additions, we like this as a leading indicator as temporary workers are far more flexible and firms are more willing to take them on in the early stages of a recovery. In a labour force of 154 million, these increases are not going to set the world alight (or more importantly drive strong consumer spending), but people will take encouragement where their can find it especially heading into a holiday weekend. –David Semmens, Standard Chartered Bank
–The largest increases in unemployment were among African Americans who saw their overall rate rise 0.8 percentage points to 16.3 percent, near the recession peak. The unemployment rate for black teens jumped 4.8 percentage points to 45.4%. Unemployment for Hispanics edged down to 12.0 percent, a full percentage point below its year-ago level. –Dean Baker, Center for Economic and Policy Research
Dig into an interactive summary of economists’ forecasts for the coming year from the latest WSJ.com survey.
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