Employers add no net jobs in Aug.; rate unchanged

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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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