Payrolls in U.S. Increased Less Than Forecast in August

Payrolls in U.S. Increased Less Than Forecast in August

bloomberg.com

Payrolls rose less than projected in August and the unemployment rate was unexpectedly driven down by Americans leaving the labor force, boosting the odds of additional Federal Reserveeasing to spur a faltering recovery.
The economy added 96,000 workers after a revised 141,000 increase in July that was smaller than initially estimated, Labor Department figures showed today in Washington. The median estimate of 92 economists surveyed by Bloomberg called for a gain of 130,000. The jobless rate fell to 8.1 percent.
Treasuries and gold rose on bets the figures make it more likely Fed policy makers will expand record monetary stimulus next week after Chairman Ben S. Bernanke called unemployment a “grave concern.” The report also dealt a blow to President Barack Obama one day after he accepted the Democratic Party’s nomination for a second term.
“This is definitely a setback for the labor market and the economy,” said Michael Feroli, chief U.S. economist at JPMorgan Chase & Co. in New York and former economist for the Fed. “This clearly validates Bernanke’s concern. We have Europe, the fiscal cliff, and it is a generally cautious business environment.”
The yield on the 10-year Treasury note, which moves inversely to price, fell to 1.62 percent from 1.68 percent late yesterday. Gold futures for December delivery climbed 1.5 percent to $1,731 an ounce on the Comex at 11:54 a.m. in New York. The Standard & Poor’s 500 Index rose 0.3 percent to 1,435.75.

Fiscal Cliff

Employers may be reluctant to expand headcounts as they face a global economic slowdown and the so-called fiscal cliff, the $600 billion of tax increases and spending cuts that will take effect automatically at the end of the year unless Congress acts.
Some companies are planning to reduce staff. Mountain View, California-based Google Inc. (GOOG) said on Aug. 13 it will cut about 4,000 positions at its Motorola Mobility Holdings Inc. unit, with about one-third of the reductions coming in the U.S. Printer maker Lexmark International Inc. (LXK) on Aug. 28 announced plans to eliminate 1,700 jobs globally.
For Kimberly Hackler of White, Georgia, the job search has been “frustrating at best, a little disheartening.” The 49- year-old has been looking for work since November, applying for about 190 positions.
“I’m very concerned about those of us who are unemployed and where are we going to find stable employment,” Hackler said. “I don’t see the economy improving anytime soon. I am concerned it could get worse.”
Today’s report dealt a blow to Obama’s hopes of gaining momentum coming out of his party convention and gave Republican candidate Mitt Romney another campaign weapon.

‘Haven’t Worked’

“If last night was the party, this morning is the hangover,” Romney said in a statement. “It is clear that President Obama just hasn’t lived up to his promises and his policies haven’t worked.”
Labor Secretary Hilda Solis used the report to renew calls for Congress to approve a $447 billion jobs plan proposed by the administration last September.
“We still see some areas where we need more improvement,” Solis said in an interview with Bloomberg Television. “That’s why we need to have cooperation with the Congress. They’ve got a proposal up there, the American Jobs Act, that would help create a million jobs.”
Bloomberg survey estimates ranged from increases of 70,000 to 185,000. Revisions to prior reports subtracted a total of 41,000 jobs from payrolls in the previous two months.
Factory employment fell by the most in two years, temporary-help companies eliminated positions for the first time in five months, and the share of the working-age population in the labor force slumped to the lowest since 1981.

Private Payrolls

Private payrolls, which exclude government agencies, rose 103,000 after a revised gain of 162,000. They were projected to rise by 142,000, the survey showed.
American Axle & Manufacturing Holdings Inc. (AXL), a maker of axles and crankshafts, is among companies looking to expand as the auto industry rebounds. The Detroit-based company plans to hire 400 to 500 workers at its Three Rivers, Michigan, factory over the next two years, David Tworek, a spokesman, said in an e-mail last month.
The jobless rate fell from 8.3 percent as 368,000 Americans left the labor force. Unemployment was forecast to hold at 8.3 percent, according to the survey median. Estimates in the Bloomberg survey ranged from 8.1 percent to 8.4 percent.
Factory payrolls decreased by 15,000, compared with a survey forecast for a 10,000 increase, after a 23,000 gain in the previous month. Automakers cut 7,500 jobs last month.

Fewer Shutdowns

The figures reflected the reversal of a July increase that was propelled by fewer shutdowns at automakers for annual retooling related to the new model year. Still, carmakers may continue to add workers. Chrysler Group LLC, Ford Motor Co., General Motors Co. (GM), Toyota Motor Corp. and Honda Motor Co. reported U.S. auto sales in August that rose more than analysts estimated as new models attracted buyers.
Employment at service-providers increased 119,000. Construction companies added 1,000 workers and retailers took on 6,100 employees. Government payrolls decreased by 7,000. The number of temporary workers decreased almost 5,000.
Average hourly earnings were little changed, and up 1.7 percent from August 2011, today’s report showed. The 12-month change matched the smallest gain since record-keeping began in 2007.
The participation rate, which indicates the share of working-age people in the labor force, fell to 63.5 percent, the lowest since September 1981, from 63.7 percent.
Companies from Intel Corp. to FedEx Corp. are sounding alarms on the outlook for the world’s largest economy as global growth cools.

Forecasts Cut

Intel, the world’s largest semiconductor maker, today slashed its third-quarter sales prediction amid declining demand for personal computers from corporate customers. FedEx this week projected its first decline in quarterly earnings in almost three years as slowing growth hurt demand for the express packages that provide most of its sales.
Payroll gains slowed from an average 226,000 in the first quarter to 73,000 in the April to June period, before picking up in July. The U.S. has managed to recover 4.1 million of the 8.8 million jobs lost as a result of the 18-month recession that ended in June 2009.
The unemployment rate, derived from a separate Labor Department survey of households, has exceeded 8 percent since February 2009, the longest stretch in monthly records going back to 1948.

Bernanke Speech

Bernanke, in an Aug. 31 speech in Jackson Hole, Wyoming, cited “the daunting economic challenges” that confront the U.S. He also said the Fed will provide additional policy stimulus as needed to promote a stronger economic recovery.
“The stagnation of the labor market in particular is a grave concern,” he said. Persistently high unemployment “will wreak structural damage on our economy that could last for many years.”
Fed officials at their July 31-Aug. 1 meeting were moving toward additional monetary policy action, according to minutes of the gathering. Many members of the panel said more stimulus will be needed “fairly soon” unless the recovery shows signs of a “substantial and sustainable strengthening.”
To contact the reporter on this story: Shobhana Chandra in Washington atschandra1@bloomberg.net
To contact the editor responsible for this story: Christopher Wellisz at cwellisz@bloomberg.net

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Payrolls in U.S. Rose 96,000 in August, Jobless Rate Falls

John Moore/Getty Images

Job seekers attend a career fair in Midtown Manhattan, New York City.

Job seekers attend a career fair in Midtown Manhattan, New York City. Photographer: John Moore/Getty Images

Sept. 7 (Bloomberg) -- Bloomberg economist Joseph Brusuelas talks about the August U.S. employment report released today. The economy added 96,000 workers, less than projected, last month following a revised 141,000 increase in July that was smaller than initially estimated, Labor Department figures. The unemployment rate fell to 8.1 percent. (Joseph Brusuelas is a Bloomberg economist. The opinions expressed are his own. Source: Bloomberg)

Sept. 7 (Bloomberg) -- Mohamed El-Erian, chief executive officer and co-chief investment officer of Pacific Investment Management Co., talks about the August U.S. employment report and the outlook for Federal Reserve policy. He talks with Betty Liu and Dominic Chu on Bloomberg Television's "In the Loop." (Source: Bloomberg)

Sept. 7 (Bloomberg) -- U.S. Labor Secretary Hilda Solis talks about the August payrolls report and economic outlook. The economy added 96,000 workers last month following a revised 141,000 increase in July that was smaller than initially estimated, Labor Department figures showed today in Washington. Solis speaks with Betty Liu on Bloomberg Television's "In the Loop." Mohamed El-Erian, chief executive officer and co-chief investment officer of Pacific Investment Management Co., also speaks. (Source: Bloomberg)

Sept. 7 (Bloomberg) -- Payrolls rose less than projected in August and the unemployment rate declined as more Americans left the labor force, indicating the U.S. labor market is stagnating. The economy added 96,000 workers last month following a revised 141,000 rise in July that was smaller than initially estimated, Labor Department figures showed today in Washington. Unemployment fell to 8.1 percent, and hourly earnings were unchanged. Peter Cook reports on Bloomberg Television's "In the Loop." (Source: Bloomberg)

Sept. 7 (Bloomberg) -- Leo Hindery, managing partner at InterMedia Partners LP, talks about the August payrolls report and the outlook for Federal Reserve monetary policy. Payrolls rose less than projected last month and the unemployment rate declined as more Americans left the labor force, indicating the U.S. labor market is stagnating. Hindery speaks with Betty Liu, Michael McKee, Peter Cook and Dominic Chu on Bloomberg Television’s “In the Loop.” (Source: Bloomberg)

Sept. 7 (Bloomberg) -- Matthew Ferguson, chief executive officer of Careerbuilder.com, talks about the U.S. labor market. Ferguson speaks with Betty Liu on Bloomberg Television's "In the Loop." (Source: Bloomberg)

Sept. 7 (Bloomberg) -- Tom Porcelli, chief U.S. economist at RBC Capital Markets, talks about the outlook for the U.S. labor market and economy. He speaks with Tom Keene and Sara Eisen on Bloomberg Television’s “Surveillance." (Source: Bloomberg)

Sept. 7 (Bloomberg) -- Anne Mathias, director of Washington research at Guggenheim Securities, talks about the U.S. economy and markets, and the 2012 presidential election. She speaks with Tom Keene and Sara Eisen on Bloomberg Television's "Surveillance." (Source: Bloomberg)