5 things to know about the jobs report
Today's data surprised investors and economists alike, suggesting that earlier gloom was too gloomy. But there still should be worries about long-term unemployment.
Many pessimists predicted a big decline in August payroll employment and expected private employment to show almost no growth.
Nonfarm payrolls fell from July. That was expected, but most economists had forecast declines of 100,000 to 110,000 jobs, mostly because of the release of workers on the U.S. census and a lack of private-sector growth. The actual number was 54,000.
Here's what else you need to know.
Long-term unemployment remains the big problem. While the stated rate of unemployment is 9.6%, the government also reports a measure that includes people "marginally attached" to the work force. That rate was 16.7% in August and has changed little in a year. This measure includes discouraged workers and those working in part-time jobs who want full-time jobs.
Revisions matter. Not really discussed in the payroll numbers were the revisions for June and July showing a better picture than originally thought. Nonfarm payrolls were revised higher by a total of 123,000 jobs. The government's original estimate for the change in July nonfarm payrolls was a decline of 131,000 jobs. The revision cut the decline to 54,000. Private-sector employment gains, originally estimated at 71,000, was revised to 107,000.
Manufacturing is still showing strength. Yes, the Labor Department said employment in the sector dropped 27,000. Most of that, however, had to do with General Motors' shifting its summer factory retooling schedules. The Institute for Supply Management's August report on manufacturing earlier this week showed employment growth. The ISM's report on nonmanufacturing, released today, showed employment contraction. Better, the workweek for workers in manufacturing was up slightly to 40.1 hours. Overtime was still up.
The recovery is still wobbly. The word "wobbly" comes from IHS Global Insight's Nigel Gault, who noted that a gain of 67,000 private-sector jobs is hardly great. To cut into the unemployment rate requires growth of at least 150,000 new jobs each month.
The stubbornness of the jobs picture isn't a surprise. Fact is, when the national unemployment rate hits 10%, it is never a one-month wonder. It's part of a longer-term problem. Ronald Reagan came to office in January 1981 with the national unemployment rate at 7.5%. Despite a big tax bill, the rate rose steadily in 1981 and 1982. It topped 9% for the first time in March 1982 and 10% in September. It didn't fall below 9% until October 1983.
Admittedly, the reason for the job crunch in the 1980s was different: The economy was adjusting to then-Federal Reserve Chairman Paul Volcker's crusade to wring inflation expectations out of the economy.
The economy now is adjusting to a blowout in the real-estate and financial sectors and a massive decline in U.S. manufacturing -- especially in the automobile industry -- through the first decade of the 21st century.
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