Nonfarm payrolls declined a smaller-than-expected 54,000 in August, while employment in the private sector surprised to the upside, rising by 67,000 last month (see CHART). Though down from July's upwardly revised gain of 107,000, the larger-than-expected increase, which was more than double some estimates, suggests that conditions in the labor market may not be as dire as many had feared.
In the meantime, the unemployment rate edged up from 9.5% in July to 9.6% last month, as growth in the labor force outpaced gains in employment.
Adding to the relatively good cheer brought on by the data, total private sector employment was revised upward by 30,000 in June and by 36,000 in July.
Taking a closer look at the report, government positions fell by 121,000, reflecting the departure of 114,000 temporary Census 2010 workers from federal payrolls. Manufacturing slipped by 27,000 last month amid weakness in autos, while construction increased by 19,000.
Total private-sector employment has now rebounded by a total of 763,000 positions since hitting the low back in December 2009.
Today's report is welcome, but bumps in the road remain. Weekly jobless claims are holding at elevated levels, and recent job creation has not been enough to bring down the unemployment rate to more acceptable levels. Most economists estimate that the economy must create roughly 150,000 each month in order to accommodate population growth. Thus far employment growth has been far short.
Overall, data have been mixed as Wednesday's upbeat report on manufacturing was offset by a disappointing number on the service sector today. But coming on the heels of a pick up in consumer spending in July, retail sales for August that were reported yesterday from the major retailers were a little better than expected.
The economic recovery may not be not stalling, but the low level of job creation is the latest sign that the uncertainty clouding the economic outlook has yet to lift. And with an election just around the corner, pressure is likely to grow on the majority party to implement new measures to encourage job growth.
For more information and a look at current issues affecting the economy: Please see Tomorrow's Economy Today. Additionally, a weaker-than-expected report on the service sector is also available.
For more information about how the unemployment rate and nonfarm payrolls are calculated, please see Economy 101: What is the unemployment rate? and Economy 101: What are nonfarm payrolls?
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