Unemployment rate rises but private firms are hiring

McClatchy NewspapersSeptember 3, 2010 

WASHINGTON — The unemployment rate went up slightly to 9.6 percent in August as employers shed 54,000 jobs during the month, the Labor Department said Friday in a jobs report that nonetheless provided a surprise in better-than-expected private-sector and temporary hiring.

Much of the net job loss was the result of census 2010 workers exiting payrolls, as their work was complete. The narrower number for private-sector hiring showed that 67,000 jobs were added in companies and corporations, down from July’s 107,000 but above what mainstream forecasters had expected.

Also surprising forecasters were the 16,800 temporary positions created last month, generally a harbinger of future hiring as employers test the waters with part-timers. Wage growth also was stronger than expected at 0.3 percent, a sign that some workers are getting more money to spend.

Government statisticians revised preliminary estimates for June and July, too, showing that about 123,000 fewer jobs were lost over those months than originally had been projected.

It all added up to a more bullish jobs report than the consensus expectations of mainstream economists.

“The jobs numbers were good, and measurably better than expected, but far from good enough. Private-sector job gains have averaged close to 90,000 per month since the start of the year when job growth resumed,” said Mark Zandi, the chief economist for forecaster Moody’s Analytics. “This is enough to ensure that the economy won't slide back into recession, but it is well short of the 150,000 per month needed to forestall further increases in unemployment.”

The economy continues to lose ground on jobs because of the large number of new entrants into the work force. The jobless rate in August crept up a tenth of a percentage point to 9.6 percent, in part because of the growth in the work force and formerly discouraged workers coming back into the labor force to seek employment.

Through the end of August, private employers have added 763,000 jobs this year. While positive, that's against a grim backdrop of almost 8.4 million jobs lost in 2008 and 2009, suggesting a long road ahead still for the 14.9 million Americans who are on the unemployment rolls, 6.2 million of them jobless for half a year or longer.

“This report shows continued positive but subpar employment growth, not enough to absorb new workers or lower unemployment. Unfortunately, this is what is expected for the foreseeable future,” said Lawrence Mishel, the president of the liberal Economic Policy Institute.

President Barack Obama put his economic team before the White House cameras Friday and touted the eighth consecutive month of growth in private-sector employment.

“We just have to speed it up,” the president said, stressing that jobs must continue to be created. He repeated his call for Republicans in Congress to get behind his legislation to provide more help for small businesses, which account for about 60 percent of hiring in the nation.

In her final blog on her last day, the departing head of the White House Council of Economic Advisers, Christina Romer, also focused on the positive.

“Against the backdrop of some unsettling economic data in the past few weeks, today’s numbers are reassuring that growth and recovery are continuing,” Romer wrote. “At the same time, the fact that the growth of private-sector payrolls is below the level needed to keep up with normal growth of the labor force is obviously unacceptable.”

In a research note, analysts at forecaster RDQ Economics in New York noted Friday that the total payroll revisions for June and July suggest that hiring and economic growth aren’t as weak as had been assumed.

“Our best guess is that the summer slowdown in growth is beginning to fade and we still expect growth to average close to 3 percent in the second half of the year,” RDQ analysts said.

Most mainstream forecasters viewed Friday’s report in a positive light.

“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, the chief U.S. economist for IHS Global Insight, said in a research note.

Friday’s report was full of ups and downs.

For example, the number of people who'd been unemployed for 27 weeks or longer fell by 323,000. At the same time, those who were working part time but wanted to work full time increased by 331,000.

To John Challenger, the CEO of the jobs consultancy Challenger, Gray & Christmas, this suggests that many workers are trying to get their feet in the door through part-time assignments.

“The job market has a long way to go before it starts to look and feel like a recovery, which makes stagnant reports like today’s all the more frustrating. Progress is indeed being made, but it is occurring in such small increments and it is so tenuous that it doesn’t seem like progress at all,” he said in a statement.

Further, manufacturers shed 27,000 jobs in August after several months of gains, while the hard-hit construction sector added 19,000 jobs despite all sorts of negative news on housing and commercial real estate.

Additionally, hourly earnings rose by a healthy 0.3 percent in August, but the workweek remained flat.

August by the numbers:

— Construction, up 19,000.

—Trade, transportation and utilities, down 9,000.

— Financial services, down 4,000.

— Leisure and hospitality, up 13,000.

— Manufacturing, down 27,000.

— Health care, up 28,200.

— Government, down 121,000.

— Retail, down 4,900.

— Professional and business services, up 20,000.

— Temporary help services, up 16,800.

ON THE WEB

BLS report

Employment by sector

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