Do NOT be tricked by the reduction in the unemployment rate...it's because more folks have given up hope of finding a job....It's NOT a good report for Obama...
Jobs growth cools in August, seen forcing Fed's hand
Reuters – 33 minutes ago..By Lucia Mutikani
WASHINGTON (Reuters) - Jobs growth slowed sharply in August, setting the stage for the Federal Reserve to pump additional money into the sluggish economy next week and dealing a blow to President Obama as he seeks reelection in November.
Nonfarm payrolls increased only 96,000 last month, the Labor Department said on Friday. While the unemployment rate dropped to 8.1 percent from 8.3 percent in July, that was because so many Americans gave up the hunt for work.
The survey of households from which the jobless rate is derived showed a drop in employment. The lackluster report keeps the pressure on Obama ahead of the November vote in which the health of the economy looms large.
"This weak employment report, in jobs, wages, hours worked and participation is probably the last piece the Fed needs before launching another round of quantitative easing next week," said Joseph Trevisani, chief market strategist at Worldwide Markets in Woodcliff Lake, New Jersey.
U.S. stock index futures pared their gains on the report, while Treasury debt prices turned positive. The dollar extended its losses versus the euro.
Economists polled by Reuters had expected payrolls to rise 125,000 last month, but some had pushed their forecasts higher after upbeat data on Thursday.
Fed Chairman Ben Bernanke last week said the labor market's stagnation was a "grave concern," a comment that raised expectations for a further easing of monetary policy as soon as the central bank's meeting on Wednesday and Thursday.
The economy has experienced three years of growth since the 2007-09 recession, but the expansion has been grudging and the jobless rate has held above 8 percent for more than three years -- the longest stretch since the Great Depression.
The jobless rate peaked at 10 percent in October 2009, but progress reducing it stalled this year, threatening Obama's bid for a second term. An online Reuters/Ipsos poll on Thursday gave Republican Challenger Mitt Romney a 1-point edge on Obama, 45 percent to 44 percent.
The lack of headway putting Americans back to work has also put the question of further monetary stimulus on the table at the Fed. The central bank has held interest rates close to zero for nearly four years and pumped about $2.3 trillion into the economy through two bouts of bond buying.
AMERICANS GIVE UP SEARCHING FOR WORK
The weak tenor of the employment report was also emphasized by revisions to June and July data to show 41,000 fewer jobs created than previously reported.
In addition, the labor force participation rate, or the percentage of Americans who either have a job or are looking for one, fell to 63.5 percent -- the lowest since September 1981.
A total of 368,000 people gave up looking for work in August, the household survey showed.
Since the beginning of the year, job growth has averaged 139,000 per month, compared with an average monthly gain of 153,000 in 2011.
Economists blame fears of the so-called U.S. fiscal cliff -- the $500 billion or so in expiring tax cuts and government spending reductions set to take hold at the start of next year unless Congress acts -- and Europe's long-running debt problems, for the slowdown in hiring.
Job creation last month was weak across the board, with manufacturing payrolls falling 15,000, the first decline since September last year. Factory jobs were inflated in July because automobile manufacturers kept plants running when they would normally shut them for retooling.
There was little improvement in construction employment, which added 1,000 jobs. Temporary hiring fell 4,900, declining for the first time since March.
Utilities payrolls saw a snap back, adding 8,800 after being depressed by the strike of about 9,000 workers in July.
Government payrolls declined 7,000, falling for a sixth straight month.
Average hourly earnings fell one cent last month, highlighting the underlying weakness in the labor market. Earnings have risen 1.7 percent over the past 12 months.
The average work week was steady at 34.4 hours in August.
(Additional reporting by Nick Olivari in New York; Editing by Andrea Ricci)
Here's Another Article showing why the report is really bad...
US economy adds 96K jobs, unemployment rate falls to 8.1 percent
Published September 07, 2012 Associated Press
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 work. 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.
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 still see a slow economy, resulting in more demand for low-risk investments like U.S. Treasurys.
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."
Friday's report provided fodder for both presidential candidates. Republican nominee Mitt Romney has pointed to 43 straight months in which unemployment has exceeded 8 percent.
At the same time, the report marks the 30th straight month of private-sector job gains, a point Obama and his allies are certain to spotlight.
The 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.
Sluggish hiring could nudge the Federal Reserve to announce some new action to boost growth after it holds a policy meeting next week.
The report on hiring and unemployment is among the most politically consequential of the campaign. The figures arrive just 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.
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 population that is either working or looking for work fell to 63.5 percent. That's the lowest level in 31 years for the labor force participation rate.
Average hourly wages dipped a penny 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 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.
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