Job Losses Weigh on Recovery
Layoffs Slow but Unemployment Rate Hits 9.7%, Highest Since
1983
Maureen Sanders looks for postings at the
Employment Connection on Wednesday in Parma, Ohio.
Employers cut jobs in August at the slowest pace in a year, but a jump in the
unemployment rate to a 26-year high of 9.7% reinforced worries that a weak labor
market could weigh on consumer spending and the vigor of the economic recovery.
Nonfarm payrolls fell by 216,000 jobs in the month, fewer than the 276,000
lost in July, the Labor Department said Friday. The economy has shed 6.9 million
jobs since the recession began in December 2007. The data reinforced
expectations that employers will begin adding jobs by early next year, though
the pace of job creation remains uncertain.
The latest figures are consistent with an economy pulling out of the deepest
downturn since the Great Depression. But rising unemployment portends persistent
weakness in consumer confidence, income and spending, even as manufacturers
start bouncing back and stocks revive. The construction and manufacturing
sectors together accounted for more than half of August's job losses. Losses in
retail and business services narrowed. The biggest gains came in health care.
Stephen Stanley of RBS Securities said the report "strengthens our conviction
of a relatively upbeat economic outlook," but added that "it was not far enough
away from expectations to change the views of either optimists or pessimists."
Rising joblessness is likely to heat up the debate in Washington about the
efficacy of the $787 billion fiscal stimulus. Government payrolls declined only
18,000 in August. If not for federal support for state and local budgets, they
probably would have fallen further. On the other hand, stimulus funds are
flowing too slowly to offset continuing cuts by private employers.
"I want to be clear about something: Less bad is not good," Vice President
Joe Biden said. "That's not how President Obama and I measure success."
The rise in unemployment, after dipping to 9.4% in July, came as more
Americans returned to the work force. Teenage unemployment hit 25.5%, the
highest since the government began keeping records in 1948. Most economists
expect the rate to top 10% in coming months and stay over 9% through 2010.
Write to Sudeep Reddy at
sudeep.reddy@wsj.com
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