Last month, U.S. employers slashed 216,000 jobs from their payrolls, their smallest cut since August 2008, the Labor Department reported today. The job number was largely in line with economists expectations. But it wasn't all good news. Indeed, this Labor Day, nearly 10 percent of the nation's workers will be unemployed and searching for work. The unemployment rate shot to 9.7 percent, its highest level since June 1983. The unemployment rate is measured through a household survey, a different survey than is used to measure the monthly jobs number. The household survey showed the labor force increased by 73,000 workers last month, and employment dropped by 392,000.
What happened to teens this summer? Jobs were far more scarce than usual for teenagers this summer, and with fewer openings, they faced much more competition than in a typical summer. The teen unemployment rate rose to a record high of 25.5 percent in August, up from 23.8 percent in July. The unemployment rate could very well fall in the next few months, thanks to the normal seasonal decline, economists David Greenlaw and Ted Wieseman of Morgan Stanley Research said in a morning note.
Who else is hurt most by this job market? Men are clearly in worse shape than women. The unemployment rate for adult men is 10.1 percent, compared with 7.6 percent for adult women. The unemployment rate for Hispanic or Latino workers rose 0.7 percentage point to 13 percent, compared with a 0.3 percentage point rise to 8.9 percent for white workers. Black unemployment increased 0.6 percent to 15.1 percent, compared with an unemployment rate of 8.4 percent before the start of the recession.
Job seekers continue to face long job searches. The number of people who have been unemployed for 27 weeks or more continued to grow by a small margin and now totals close to 5 million. That, along with the jump in the unemployment rate, will likely put additional pressure on Congress to extend federally funded unemployment benefits again, despite the fact that many states already have as many as 79 weeks of benefits.
When will we see some job growth? One positive sign of things to come: Job losses in temp services have slowed "markedly" in the past four months, the Labor Department says. Temp jobs can be a useful indicator for the future trends in overall hiring. Economists still, by and large, expect unemployment to peak around 10 percent—and not until sometime next year, probably early in the year.
Which industries are doing worse/better? Despite the success of the "cash for clunkers" program, employment in motor vehicles and parts manufacturing fell 15,000 last month. Jobs in the sector had increased 31,000 in July. Construction has lost 1.4 million jobs since the start of the recession, although monthly job losses have moderated from their previous levels. Losses have moved from the residential construction industry to the nonresidential and heavy construction industries.
On the other hand, education and health services added a healthy 52,000 jobs in August. Retail job losses slowed—employers cut 10,000 jobs.
What are the experts saying?
"Today's report—together with other indications of a moderation in the pace of layoffs—is consistent with the notion that the labor market is progressing toward recovery. We expect to see payroll growth by the end of this year. However, as mentioned earlier, the unemployment rate probably won't peak until early next year. In fact, if the participation rate begins to flatten out (as seems likely), employment will need to rise 125,000 or so per month merely in order to maintain a steady unemployment rate." —Ted Greenlaw and Ted Wieseman, Morgan Stanley Research
"The August report continues a string of official results which are better than suggested by other labor market data (initial claims, the ADP survey, withholding tax receipts, etc.). Nonetheless, whether or not today's and other recent reports overstate the case, the improving trend of the labor market after the autumn/winter carnage cannot be denied. What is still very much open to question is how fast the move will be to stabilization of payrolls and eventually to job growth. We continue to believe that the process will be a slow one, and that households will be contending with weak income growth and balance sheet issues for some time." —Joshua Shapiro, chief U.S. economist at MFR