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WASHINGTON (AP) — Employers stopped adding jobs in August, an
alarming setback for an economy that has struggled to grow and
might be at risk of another recession.
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It was the weakest jobs report since September 2010. The
unemployment rate remained at 9.1 percent.
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Stock futures plunged on the news. Dow futures fell nearly 100
points shortly before the market opened.
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A strike by 45,000 Verizon workers lowered the job totals. Those
workers are now back on the job.
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The weakness in employment was underscored by revisions to the jobs
data for June and July. Collectively, those figures were lowered to
show 58,000 fewer jobs added. The downward revisions were all in
government jobs.
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The average work week also declined and hourly earnings fell by 3
cents to $23.09.
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Weak growth, Standard & Poor’s downgrade of long-term U.S. debt
in early August and a sell-off on Wall Street likely kept some
businesses from hiring.
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With job creation stalled and wages declining, consumers won’t see
much gain in incomes. That will limit their ability to spend, which
undercuts growth. Consumer spending accounts for about 70 percent
of the economy.
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“The stagnation in US payroll employment is an ominous sign,” said
Paul Ashworth, an economist at Capital Economics. “The broad
message is that even if the US economy doesn’t start to contract
again, any expansion is going to be very, very modest and fall well
short of what would be needed to drive the still elevated
unemployment rate lower.”
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The economy needs to add roughly 250,000 jobs a month to rapidly
bring down the unemployment rate, which has been above 9 percent in
all but two months since May 2009.
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In August, the private sector added 17,000 jobs, the fewest since
February 2010. That compares with 156,000 in July and 75,000 in
June.
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Hiring fell across many different sectors. Manufacturers cut 3,000
jobs, its first decline since October 2010. Construction companies,
retailers, and transportation firms also cut workers.
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The health care industry added 30,000 jobs last month.
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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.
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In August, consumer confidence fell to its lowest level since April
2009, according to the Conference Board.
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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.
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The Obama administration has 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.
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The White House Office of Management and Budget projects overall
growth of only 1.7 percent this year.
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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.
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