The unemployment rate ticked up a bit to 9.6% and that in and of itself is not terribly meaningful. I have been writing for months that the unemployment rate would almost certainly go up when the jobs pictured brightened because discouraged workers would start looking for work again. Those who do not look for work are not counted in the unemployment rate unless and until they actually look for work.
The jobs picture really is not brightening. You will see a number of positive spins on this report, but it is really pretty gloomy.
The private sector added 67,000 jobs while the public sector cut 121,000 jobs (including 114,000 Census workers) so the overall payroll employment fell by 54,000. At this point in an economic recovery, we would normally adding many jobs, not losing them. And, it gets worse.
331,000 Involuntary Part Timers
Here is a very unsettling piece of data from the Bureau of Labor Statistics report [emphasis added]:
…The number of persons employed part time for economic reasons (sometimes referred to as involuntary part-time workers) increased by 331,000 over the month to 8.9 million. These individuals were working part time because their hours had been cut back or because they were unable to find a full-time job…
This means that 331,000 people lost full-time jobs and are now working part-time, not because they want to do so, but rather because their employer had to cut back.
Those who are trying to spin this report as better than expected will probably focus on the fact that the private sector added 67,000 jobs. If you took that number of 331,000 people who are working less and assumed these folks lost a third of their hours, that would be the equivalent of the loss of 110,000 jobs. That’s what I mean by masking the true level of job losses.
All of the news was not totally gloomy though as the ranks of long-term unemployed folks fell a bit:
…The number of long-term unemployed (those jobless for 27 weeks and over) declined by 323,000 over the month to 6.2 million. In August, 42.0 percent of unemployed persons had been jobless for 27 weeks or more…
That number of 6.2 million long-term unemployed folks is not good, but at least we saw a decent decline this month. Also, previous months had upward revisions in payroll job losses, so this report is not entirely negative, but we still are not seeing the kind of job growth we would like.
MarketWatch has a good piece that gives more details and background on the report.
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Kurt Brouwer is a fee-only financial advisor with three decades of experience. He is the chairman and co-founder of Brouwer & Janachowski, LLC. Kurt has written books, articles and hundreds of blog posts on mutual funds, ETFs and other investment topics. E-mail: kurt.brouwer *at* gmail.com.
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