WASHINGTON — The nation's unemployment rate rose to 9.7 percent in August, the highest rate in more than 26 years, even as the pace of job losses slowed sharply last month, the government reported Friday.
Employers shed 216,000 jobs in August, a significant slowdown from the revised 276,000 jobs lost in July. Taken along with a key manufacturing index showing growth for the first time in 18 months, Friday's job numbers from the Bureau of Labor Statistics are one more indication that the U.S. economy appears to have hit bottom and is on a slow upward climb.
Before things get better, they have to stop getting worse, and across a wide range of measures over the last few months there are signs that the worst is over.
The rising unemployment rate, up from 9.4 percent in July, will continue to dampen consumer confidence and business hiring, however. The significance of Friday's report is that it shows the trajectory of job losses continuing to improve steadily.
"That really is what is important," Christina Romer, the head of the White House Council of Economic Advisers, said on CNBC television. "It's still a terrible number, but it is certainly showing those numbers moderating."
Health care was the only bright spot in Friday's job numbers. The sector added more than 28,000 jobs, while the construction and manufacturing sectors posted another month of big losses, 65,000 and 63,000 positions, respectively. The services sector, both financial services and retail sales, lost fewer jobs, however, a sign of an improving trajectory.
Analysts welcomed Friday's numbers, but not with much cheer.
"This is a mixed report that, while consistent with the view that the recession has ended, suggests that the smaller-than-expected decline in payrolls exaggerates the improvement in the labor market," forecaster RDQ Economics wrote in a research note for investors.
Added David Huether, the chief economist for the National Association of Manufacturers, "The fact that the August decline was the mildest drop in a year is somewhat encouraging. Still, the fact that employment continued to decline shows that an improvement in the labor market, which is needed for a sustained expansion to take hold, is still months away."
The Department of Labor numbers point to the challenges ahead, with 16.8 percent of the work force underemployed or unemployed. Getting to growth strong enough to reverse this dismal indicator will challenge the government for years to come.
Since the recession began in December 2007, the number of unemployed has risen by 7.4 million and the unemployment rate has risen by a whopping 4.8 percentage points. Some 14.9 million Americans are unemployed, and when rounded as a percentage, one in 10 working-age Americans is jobless.
"The president has said from the beginning it's a long, hard slog," Romer said, noting that August's job losses returned to the pace they were before last September's-near collapse of the global financial system, the point where economies everywhere nosedived.
Analysts warn that despite the slower pace of job losses, the unemployment rate is expected to keep ticking upward this year because there are more new entrants in the work force and more people giving up looking for work.
"The unemployment rate has begun to rise more slowly as the rate of employment contraction has moderated, but it will tend to rise even in the early stage of labor market expansion, when job growth falls short of labor force growth," Alan Levenson, the chief economist for investment manager T. Rowe Price, said in a research note.
Supporters of the government’s economic stimulus efforts think that Friday's numbers underscore how the $787 billion stimulus package that passed earlier this year is starting to be felt across the economy.
"The subdued job losses are now a third of what they were before the stimulus plan hit the street and wage growth picked up, both further signs of stabilization," RDQ Economics wrote in its research note. "Of course, unemployment is still heading up and has more to go, so we are far from out of the woods yet."
JULY EMPLOYMENT BY SECTOR:
_ Construction, fell by 65,000.
_ Manufacturing, down by 63,000.
_ Financial services, down 28,000.
_ Professional and business services, down by 22,000.
_ Leisure and hospitality, lost 21,000.
_ Government, down 18,000.
_ Retail, off 9,600.
_ Health care and education, up 52,000.
UNEMPLOYMENT RATE BY RACE, GENDER:
_ African-Americans, 15.1 percent.
_ Hispanics, 13.0 percent.
_ Whites, 8.9 percent.
_ Asians, 7.5 percent.
_ Teenagers, 25.5 percent.
_ Adult males, 10.1 percent.
_ Adult females, 7.6 percent.
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