The Bureau of Labor Statistics delivered yet another disappointing jobs report, this time the morning after Barack Obama’s speech claiming to be taking the nation in the right direction. Only 96,000 jobs were added to the economy, and while the jobless rate edged downward to 8.1%, that came from even more people leaving the workforce:
Total nonfarm payroll employment rose by 96,000 in August, and the unemployment rate edged down to 8.1 percent, the U.S. Bureau of Labor Statistics reported today. Employment increased in food services and drinking places, in professional and technical services, and in health care.
The unemployment rate edged down in August to 8.1 percent. Since the beginning of this year, the rate has held in a narrow range of 8.1 to 8.3 percent. The number of unemployed persons, at 12.5 million, was little changed in August. …
Both the civilian labor force (154.6 million) and the labor force participation rate (63.5 percent) declined in August. The employment-population ratio, at 58.3 percent, was little changed.
That’s a new 30-year low in the civilian participation rate, lower than April’s 63.6%. That’s the reason for the decline in the jobless rate. The workforce decline artificially depresses the official unemployment rate. If we had the same level of civilian participation as we did at the beginning of the recovery in June 2009 (65.7%), we’d be looking at a jobless rate of well over 10%. The employment-population ratio dropped to 58.3% in August, not as low as last year’s 58.2%, but still bouncing along a generational bottom. That measure was 59.4% at the beginning of the recovery. Update: The workforce shrank by 368,000.
Interestingly, the U-6 measure declined to 14.7%. As people leave the workforce, that number should increase. Looking at the disconnect between the two, I’d guess that the number of people claiming disability went back up again, too. Looking at the A-6 table, it shows only a 29,000 jump in August, far below the nearly 300K increase in July.
CNBC reports that the previously sunny July report got downwardly revised, as did June, and that the report missed expectations in a big way:
But job reports for June and July were revised lower. The June count fell from 64,000 to 45,000, while July’s number came in at 141,000 from an originally reported 163,000.
Despite hopes that job creation would be better than expected, the monthly report fell short of economist expectations that 125,000 jobs were added for the month. The government said private payrolls increased by 103,000, about half the 201,000 that ADP reported Thursday.
Reuters also notes the big miss, and wonders whether the Fed will intervene now:
Jobs growth slowed more than expected in August, setting the stage for the Federal Reserve to pump additional money into the sluggish economy next week and dealing a blow to President Obama as he seeks reelection in November.
Nonfarm payrolls increased only 96,000 last month, the Labor Department said on Friday. While the unemployment rate dropped to 8.1 percent from 8.3 percent in July, it was largely due to Americans giving up the search for work. …
Economists polled by Reuters had expected payrolls to rise 125,000 last month, but some had pushed their forecasts higher after upbeat data on Thursday.
The economy has experienced three years of growth since the 2007-09 recession, but the expansion has been grudging and the jobless rate has held above 8 percent for more than three years — the longest stretch since the Great Depression.
A Fed intervention won’t help the economy; the product of the previous two QE efforts dissipated rapidly, as these numbers make very clear. It will only serve to anger the public, which will rightly question why the political class hasn’t taken steps to resolve the regulatory and fiscal policies that drive stagnation. That won’t help Obama, who barely mentioned jobs at all in his speech last night.
Update: I added “participation rate” to the headline for a more precise statement.