By IB Times Staff Reporter: Subscribe to IB's RSS feed
September 3, 2010 12:45 PM EDT
The Bureau of Labor Statistics (BLS) reported that non-farm payrolls fell by 54,000 in August, a smaller decline than economists' expectations. The unemployment rate rose to 9.6 percent, the highest level since May, from the previous month.
Government jobs declined by 121,000, as 114,000 temporary 2010 Census workers were let go by the federal government, the BLS report said.
Private-sector payroll employment rose modestly by 67,000.
Economists were looking for unemployment rate of 9.6 percent, overall payrolls decline of 118,000 in August and private payrolls were expected to increase by 44,000.
Futures on major U.S. stock indices point to a higher opening on Friday after the better-than-expected jobs data.
In July, overall payrolls declined by 131,000 and private payrolls gained 71,000, and unemployment rate was 9.5 percent.
The non-farm payrolls measure the change in the number of employed people during the last month of all non-farming businesses. The total non-farm payroll accounts for about 80 percent of the workers who produce the entire gross domestic product of the United States.
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Health care jobs rose by 28,000 in August, while manufacturing employment fell by 27,000 over the month due to a decline in motor vehicles and parts.
Average hourly earnings of all employees on private non-farm payrolls rose by 6 cents, or 0.3 percent, to $22.66 in August.
Paul Ashworth, senior US economist at Capital Economics, found the payroll report “reassuring,” suggesting that while economic growth may have slowed, it is not collapsing.
“Unfortunately, the economy isn't growing fast enough to create the number of extra jobs required to bring the unemployment rate down,” he cautioned.
“Total non-farm payrolls fell by 54,000 in August, exactly the same size decline as in July. Together, the size of the monthly declines in June and July were revised down by 123,000. Stripping out the 114,000 census-related layoffs and a modest drop in other public sector employment, private payrolls increased by 67,000 last month, down from 107,000 in July.”
However, that apparent slowdown may just be an illusion, he added.
“Employment at vehicle manufacturing plants jumped by 22,000 in July and then fell back by exactly the same amount in August,” he noted.
“We suspect this is a distortion caused by the unusually small number of plant shutdowns this summer. Strip that out and private employment growth actually pick up a little bit last month.”
Overall, Ashworth indicated, along with the surprise increase in the ISM manufacturing index reported earlier this week, this report will help to ease any remaining fears about a double-dip recession.
“Nevertheless, a year into the recovery, economic growth is still very lackluster and likely to remain so,” he stated.
“Under those circumstances, we expect the unemployment rate to remain very high for several more years.
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