Interest Rate Roundup

Friday, September 05, 2008

August jobs report shows widespread deterioration

We just got the latest figures from the Labor Department on how the jobs market fared in August. They are ugly. The details:

* Nonfarm payrolls dropped by 84,000 in August. That compares with a revised decline of 60,000 in July (previously reported as -51,000) and a Bloomberg forecast for -75,000. June's reading was also revised sharply lower (to -100,000 from -51,000 originally). We have now shed jobs for eight months in a row, the longest stretch of negative readings since the late-2001, early 2002-period.

* By industry, construction lost 8,000 jobs, manufacturing shed 61,000 jobs, and the service sector lost 27,000 jobs. The only strength was in non-economically sensitive sectors (education and health at +55,000 and government at +17,000).

* The unemployment rate soared to 6.1% from 5.7% in July. Economists were expecting the rate to remain unchanged at 5.7%. The unemployment rate is now the highest since September 2003.

* Average hourly earnings were one bright spot, rising 0.4%, compared with a revised increase of 0.4% in July and a forecast for an August gain of 0.3%. Another minor positive: The diffusion index improved to 48.9 from 41.4. This index compares the number of industries that are shedding jobs against those that are adding them. The reading is less negative (the highest since November 2007, in fact), signalling that job cuts were a bit less widespread by industry than they were previously.


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