Employers add no net jobs in August; rate unchanged
Posted September 2, 2011 12:02 a.m. EDT
Updated September 2, 2011 2:00 p.m. EDT
WASHINGTON — Employers added no net workers last month and the unemployment rate was unchanged, a sign that many were nervous the U.S. economy is at risk of slipping into another recession.
The Labor Department said Friday that total payrolls were unchanged in August, the weakest report in almost a year. It's the first time since February 1945 that the government has reported a net job change of zero. The unemployment rate stayed at 9.1 percent.
A strike by 45,000 Verizon workers lowered the job totals. Those workers are back on the job.
Job gains in June and July were revised lower, to show 57,000 fewer jobs added. The downward revisions were all in government jobs. The average work week also declined and hourly earnings fell by 3 cents to $23.09.
The economy needs to add closer to 250,000 jobs per month to rapidly bring down the unemployment rate, which has been above 9 percent in all but two months since May 2009.
Weak growth, a downgrade of long-term U.S. debt and a sell-off on Wall Street likely kept some businesses from hiring.
And a strike at Verizon Communications Inc. last month is also expected to lower the job totals. As many as 45,000 Verizon employees were off the payrolls for about two weeks. Those employees are back at work.
Still, recent data show consumers and businesses weren't nearly as spooked by the summer shocks as some economists had feared.
Most retailers reported that sales grew last month. Target Corp., Macy's Inc., teen retailer Wet Seal Inc. and warehouse club operator Costco Wholesale Corp. all posted sales gains that beat Wall Street expectations. Luxury chains such as Nordstrom Inc. and Saks also fared well.
And car buyers lifted U.S. sales last month. Analysts had expected a weaker August because of anxiety about the economy and Hurricane Irene, which forced many dealers to close during the month's final weekend.
The manufacturing sector managed to expand in August for the 25th straight month. Last month's growth, though modest, defied fears that manufacturing, one of the economy's few sources of strength, had contracted last month.
Meanwhile, fewer people applied for unemployment benefits last week, a sign that layoffs have eased a bit.
All that delivered a sense of relief that the economy is still expanding — even if it's not enough to reduce the unemployment rate, raise wages and drive the housing market out of its depression.
The economy expanded at an annual pace of only 0.7 percent in the first six months of the year. That was the slowest six months of growth since the recession officially ended in June 2009.
Employers added an average of 72,000 jobs from May through July, down from an average of 215,000 per month in the previous three months.
Most economists forecast that growth may improve to about a 2 percent annual rate in the July-September quarter. But that's not fast enough to generate many jobs.
The economy's weakness was underscored Thursday by the Obama administration, which estimated that unemployment will average about 9 percent next year, when President Barack Obama will run for re-election. The rate was 7.8 percent when Obama took office.
The White House Office of Management and Budget projects overall growth of only 1.7 percent this year.
Next week, Obama will deliver a rare address to a joint session of Congress to introduce a plan for creating jobs and boosting economic growth.