August jobs report crushes hope for more hiring
WASHINGTON — American employers cut back sharply on hiring last month, crushing hopes that the job market was improving and putting more pressure on the Federal Reserve to give the sluggish economy another jolt.
The Labor Department said Friday that employers added just 96,000 jobs in August, down from 141,000 in July and too few to keep up with population growth. The unemployment rate fell to 8.1 percent from 8.3 percent, but only because many people gave up looking for work and therefore weren’t counted in the government’s calculation.
The percentage of Americans in the workforce dropped to its lowest level in 31 years.
The latest numbers were “downright dismal,” TD Economics senior economist James Marple said in a description echoed by many others.
The economy remains hobbled in the aftermath of the deepest recession since the 1930s and simply isn’t expanding fast enough to spark more hiring. Consumers, whose spending accounts for more than two-thirds of economic activity, have been whittling down debts and spending cautiously. The government reported last week that economic growth clocked a disappointing 1.7 percent annual pace in the April-June quarter.
The economy is expected to grow at an annual rate of around 2 percent for the rest of the year, consistent with only 90,000 new jobs a month.
The disappointing numbers are a blow to President Barack Obama’s re-election campaign. Unemployment is down from a peak of 10 percent in October 2009, but no incumbent president since Franklin D. Roosevelt has faced re-election with unemployment higher than 7.8 percent.
Republican presidential challenger Mitt Romney declared that “the weak jobs report is devastating news for American workers and American families ... a harsh indictment of the president’s handling of the economy.”
Obama said August’s hiring was “not good enough” and that it’s “a long, tough journey” to recover from the recession that officially ended more than three years ago.
“A declining labor force is not (a) sign of an improving economy,” said Joel Naroff, president of Naroff Economic Advisors.
Hourly pay fell. Manufacturers cut 15,000 jobs, the most in two years. And temporary-help jobs, which often signal where the job market is headed, dropped by 4,900 in August.
The economy lost 7,000 more government jobs last month. Since the recession ended in June 2009, federal, state and local governments have slashed 670,000 jobs, partially offsetting hiring by private companies.
It’s the first time since World War II that governments have shed jobs this deep into an economic recovery. Most of the government cuts have been made by states and localities.