U.S. Economy Adds 96,000 Jobs, Unemployment Rate Falls to 8.1%

by The Associated Press Sep 7th 2012 9:45AM
US economy adds 96k jobs, rate falls to 8.1%By CHRISTOPHER S RUGABER

WASHINGTON -- U.S. employers added 96,000 jobs last month, a weak figure that could slow the momentum President Barack Obama hoped to gain from his speech Thursday night to the Democratic National Convention.

The unemployment rate fell to 8.1 percent from 8.3 percent in July. But that was only because more people gave up looking for jobs. People who are out of work are counted as unemployed only if they're looking for a job.

The government also said Friday that 41,000 fewer jobs were created in July and June than first estimated. The economy has added just 139,000 jobs a month since the start of the year, below 2011's average of 153,000.

Cash-short governments were a key reason the job market was weaker in June and July than first estimated. Federal, state and local governments cut 39,000 jobs in those months -- above the earlier estimate of 18,000. In previous recoveries, governments have typically added jobs, not shed them.

Dow Jones industrial futures, which had been up before the report, fell soon after it was released but then bounced back. And the yield on the benchmark 10-year Treasury note tumbled to 1.63 percent, from 1.73 percent. That suggested that investors see a slow economy resulting in more demand for low-risk investments like U.S. Treasurys.

Friday's report was discouraging throughout. Hourly pay fell, manufacturers cut the most jobs in two years and the number of people in the work force dropped to its lowest level in 31 years.

The sluggish figures make the Federal Reserve more likely to unveil a new bond-buying program at its meeting next week to try to lift the economy, said John Silvia, chief economist at Wells Fargo. The goal of the bond purchases would be to lower long-term interest rates to encourage borrowing and spending.

"This weak jobs report is going to feed into their argument that the economy is growing at a sub-par pace," Silvia said.

The report provided fodder for both presidential candidates. Soon after the report was issued, Republican nominee Mitt Romney pointed to 43 straight months in which unemployment has now exceeded 8 percent.

"President Obama just hasn't lived up to his promises, and his policies haven't worked," Romney said in a statement.

At the same time, August marked the 30th straight month of private-sector job gains, a point Obama and his allies are certain to spotlight.

Friday's jobs report is among the most politically consequential of the campaign. It arrives as the presidential race enters the final two months before Election Day. Jobs are the core issue, and the report could sway some undecided voters.

There will be two additional employment reports before the election. But by then, more Americans will have made up their minds.

In his speech Thursday night, Obama acknowledged incomplete progress in repairing the still-struggling economy and asked voters to remain patient.

"The truth is, it will take more than a few years for us to solve challenges that have built up over the decades," Obama said.

Jim O'Sullivan, chief U.S. economist at High Frequency Economics, noted that hiring has improved slightly in the past two months. Job gains averaged 119,000 in July and August, up from an average monthly gain of 67,000 in the April-June quarter.

"There's no sign of momentum fading," he said. "That said, it's not much better. ... What you're left with is an economy that's still growing, but pretty modestly."

In addition to those who've given up looking for work, many young Americans are avoiding the job market by remaining in school. All told, the proportion of the adult population that's either working or looking for work fell to 63.5 percent.

That's the lowest level in 31 years for the so-called labor force participation rate. The rate peaked at 67.3 percent in early 2000.

Paul Ashworth, chief U.S. economist at Capital Economics, says labor force participation is on a long-term slide.

"You've got the aging of the baby boom generation," Ashworth notes. "That has been greatly compounded by the effects of the recession and the slow recovery. People are just losing patience" and dropping out of the labor force.

In two or three years, though, Ashworth expects a stronger economy will encourage more Americans to seek work and will push the participation rate up. But the higher participation rates won't last once baby boomer retirements pick up, causing more people to leave the work force, he predicts.

At its meeting on Wednesday and Thursday, the Fed is expected to consider a range of options to try to help the economy. Besides bond buying, the Fed is also considering whether to extend the timetable for any increase in record-low short-term interest rates. The Fed's current plan is to maintain record-low rates until at least late 2014.

Anthony Chan, chief economist at Chase Wealth Management, says further Fed action would likely send stock prices up, making consumers feel wealthier and more willing to spend.

Average hourly wages dipped a penny in August to $23.52 and are only slightly ahead of inflation in the past year.

The average work week was unchanged in August after being revised downward in July to 34.4 hours. And the number of temporary jobs fell for the first time in five months. Both figures suggest that companies are seeing less demand for their services and need fewer workers.

Many of the jobs were in lower-paying industries such as retail, which added 6,100 jobs, and hotels, restaurants and other leisure industries, which gained 34,000. Higher-paying manufacturing jobs fell by 15,000, the most in two years.

The manufacturing losses might have been skewed by seasonal distortions. More than half the job losses were in the auto industry. Fewer automakers shut down plants this summer to capitalize on greater demand for cars and trucks. As a result, fewer workers were temporarily laid off in July, and so fewer were called back to work in August.

The weak pace of hiring is the latest sign that businesses are reluctant to make big investments or add more workers. Europe's financial crisis has pushed the region's economy to the edge of recession. And a set of tax hikes and spending cuts scheduled to take effect at the beginning of the year have created uncertainty about future growth.

No president since Franklin D. Roosevelt during the Great Depression has been re-elected with a jobless rate over 8 percent. This year's election will likely turn on whether voters see the economy as improving or remaining stagnant or getting worse under Obama.


Copyright 2012 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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703 Comments

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kittenblu

And once again...who can trust anything that is reported on this subject?

September 10 2012 at 11:42 AM Report abuse rate up rate down Reply
John Baldwin

Obama can't fix the problem because he is the problem!

September 10 2012 at 8:47 AM Report abuse +2 rate up rate down Reply
jhrooney

The author forgot to state that 368,000 dropped out of the labor market last month. Looks like we have another Obama supporter here masked as a finance writer.

September 10 2012 at 8:46 AM Report abuse +1 rate up rate down Reply
deebe1000

The answer is not the government as Obama would like you to belive. The answer is self reliance. We all know who we are and what we are capable of accomplishing. Stand up and be counted, vote for freedom not free stuff!!!

September 10 2012 at 8:31 AM Report abuse rate up rate down Reply
toosmart4u

Think before you vote, If you vot for the GOP your retirement years may be in doom.

September 10 2012 at 8:24 AM Report abuse -2 rate up rate down Reply
dc walker

YOU CAN'T FIX THE PROBLEM UNTIL YOU PINPOINT WHERE IT STARTED...IT STARTED IN THE 70S WITH THE FIRST FREE TRADE DEAL (GSP).....OVER 600,000 JOBS HAVE FLED THE COUNTRY THROUGH UNFAIR FREE TRADE.....ALL WE DID WAS CREATE A CHEAP LABOR STATE....YOU CAN'T FIX STUPID....NAFTA WAS A GOOD IDEA GONE BAD...IT TAKES SIX MONTHS TO GET RIF OF NAFTA LET'S START NOW, LET'S GET RID OF THE MIDDLE COLUMN OF THE TARIFFS AND START PROTECTING THIS COUNTRY.

OFF THE WEB

Perhaps the most drastic switch post-NAFTA has been in the two country's trade deficit. In 1993, before the signing of NAFTA, the U.S. held a $1.6 billion trade surplus over their neighbor to the south, which supported 29,400 jobs. By 1997, the tides had turned, and Mexico laid claim to a much larger surplus of $16.6 billion. As of 2010, it's not even close. Mexico's trade surplus now hovers around $97.2 billion.

Jobs continue to be lost to NAFTA today. In the years 2007-2010, the U.S. economy has lost 116,400 as a result of the trade deficit created by NAFTA. And last year, the growth of Mexican auto exports to the United States alone created more Mexican jobs -- 30,400 -- than the entire U.S. auto industry.

It's the U.S. manufacturing sector that has suffered most mightily from NAFTA, alone accounting for 60.8 percent -- 415,000 total -- of the jobs lost to the agreement. Specifically, those making computer of electronic parts have accounted for 22 percent of all job losses, and motor vehicle and parts workers accounted for 15 percent of job losses.”

September 10 2012 at 8:19 AM Report abuse rate up rate down Reply
n2monthsocrapleft

42 MONTHS OF DOOM N GLOOM ,RECORD FORECLOSURES ,RECORD JOB LOSSES , RECORD UNEMPLOYMENT ,THERE ARE MORE "AMERICANS" ON BANKRUPTCY , N FORECLOSURE N UNEMPLOYMENT LINES TODAY THAN JOB LINES. ! ~~~~>ROMNEY ~RYAN /2012

September 10 2012 at 7:55 AM Report abuse +3 rate up rate down Reply
Jon

ITS also because if you do not quallify for benifitts and go for job help they are trying not to put you in computer and just verbally help and or give folders with supposive job leads. It happened to me and my kid who just got out of school. So if this is happening even if you r searching you r not on filr as unemployed. This seems illegal.

September 10 2012 at 6:45 AM Report abuse +1 rate up rate down Reply
magicaldvcresales

OBAMYS LYIN,AMERICAS VOTING FOR ROMNEY / RYAN / 2012

September 10 2012 at 3:26 AM Report abuse +2 rate up rate down Reply
Randy

Wow! U.S. Economy Adds 96,000 Jobs and only adds 137,000 to Food Stamps! Quite the recovery....

September 10 2012 at 1:10 AM Report abuse +5 rate up rate down Reply