Nonfarm payrolls were unchanged last month, the Labor Department said on Friday, as sagging confidence discouraged already skittish businesses from hiring.
It was the first time in nearly a year the economy had failed to create jobs, but economists cautioned against viewing the data as a recession signal, in part because employment was dampened by 45,000 striking workers at Verizon Communications.
Those workers have since returned to work and will be counted as on the payroll in September.
"The economy is struggling against stiff headwinds, which appear to have intensified in recent months," said Millan Mulraine, senior macro strategist at TD Securities in New York. "While it has clearly not fallen off the cliff, there is little to suggest it is anywhere close to regaining its momentum."
Investors fled riskier assets, sending Wall Street stocks tumbling, and sought refuge in U.S. Treasury debt and gold. Economists had expected nonfarm employment to rise 75,000 last month.
The unemployment rate, however, held at 9.1 percent as a survey of households found both job growth and, for the first time in a year, an expanding labor force.
With the jobless rate stuck above 9.0 percent and confidence collapsing, President Barack Obama faces pressure to come up with ways to spur job creation. The health of the labor market could determine whether he wins re-election next year.
Obama will lay out a new jobs plan in a speech to the nation on Thursday, and White House advisers said the jobs data underscored a need for action."He will be very specific about what we can do that can have a meaningful impact on job growth in the economy right away," Gene Sperling, a top economic adviser to Obama, told Reuters Insider.
The Republican speaker of the House of Representatives, John Boehner, said it was time for cooperation "to end the uncertainty facing families and small businesses, and create a better environment for long-term economic growth."
Republicans have wrangled with Obama and other Democrats over almost every policy issue and their last spat in July over raising the nation's debt limit fueled a big stock mark slump that hit consumer and business confidence.
EYES ON THE FED
The jobs data could also strengthen the hand of officials at the U.S. Federal Reserve who wanted to do more to help the sputtering economy in August. The economy needs to generate about 150,000 jobs each month just to keep the unemployment rate steady over time.
The Fed, which next meets on September 20-21, cut overnight interest rates to near zero in December 2008 and it has bought $2.3 trillion in securities to inject cash into the economy.
Despite simmering underlying inflation pressures, most economists expect the U.S. central bank to launch a third round of government bond buying to put downward pressure on longer-term interest rates, partly because the federal government appears intent on belt-tightening.
"Even the inflation hawks have to be concerned by this report," said Joel Naroff, chief economist at Naroff Economic Advisors in Holland, Pennsylvania. "With fiscal policy at all levels of government restraining growth, the Fed is the only game in town."
While employment was held back by the Verizon strike, the impact was offset somewhat as 23,000 public employees in Minnesota returned to work after a partial government shutdown.
Without the strike, private payrolls would have increased by 62,000 in August, instead of a paltry 17,000.
Still, the overall tenor of the report was decidedly weak.
Employers created a combined 58,000 fewer jobs in June and July than previously thought, and the length of the average workweek fell 0.1 hour to 34.2 hours, the fewest since January.
In addition, average hourly earnings dropped three cents and government employment fell by 17,000.
Despite massive cash injections by both the government and the Fed, sustainable job growth has eluded the economy.
"The entire recovery has been a recovery in name only. The Achilles heel of the recovery has always been the lack of job creation," said John Ryding, chief economist at RDQ Economics in New York.
About 43 percent of the 14 million Americans unemployed in August has been out of work for at least six months. The jobless rate would have been 16.2 percent if people who want to work but have given up looking for jobs and those working only part time because of economic reasons were counted.
Although hiring cooled, fairly steady readings on claims for jobless benefits, relatively strong consumer spending, continued demand for manufactured goods and increases in industrial production offer hope the economy will avoid recession.
Analysts say the economy should pick up steam from here, although they warn the recovery is so weak that any fresh shock could send it tumbling. In the first half of the year, the economy expanded at less than a 1 percent annual rate.
No comments:
Post a Comment