Sept. 7 - U.S. employers added fewer than expected jobs in August and the unemployment rate ticked down to 8.1 percent, as disgruntled Americans stopped looking for work, possibly pushing the Federal Reserve closer to announcing new stimulus. Conway G. Gittens reports.
The U.S. labor market took a step back in August with employment gains far below expectations. Payrolls grew in August by only 96,000 and figures for June and July were downwardly revised. Separately, the unemployment rate fell from 8.3 percent to 8.1 percent, but that's because the labor force participation rate, defined as the number of people working or looking for work, dropped to the lowest since 1981. Paralysis in Washington is leading to paralysis in human resource offices around the country, according to Markus Schomer, chief economist, at PineBridge Investments. SOUNDBITE: MARKUS SCHOMER, CHIEF ECONOMIST, PINEBRIDGE INVESTMENTS (ENGLISH) SAYING: "It is the uncertainty over taxes, the uncertainty over spending, the uncertainty over politics, uncertainty over Congress and I think that is exactly what's holding back business activity, business sentiment and at the end of the day it is holding back hiring." But there are few question marks. Some economists wonder if early hiring back in the warmer-than-usual winter months is still taking away from jobs that would have been created in late summer. Also the auto sector didn't go through its normal seasonal plant closings, which could also be distorting the numbers. Even with those factors, Schomer thinks this is as good as it gets for the rest of the year. SOUNDBITE: MARKUS SCHOMER, CHIEF ECONOMIST, PINEBRIDGE INVESTMENTS (ENGLISH) SAYING: "I was too optimistic for this report, but I thought we would get one month more of an upside surprise and then we would settle back at something closer to 100,000, which is exactly where this report now is. I think this is it, holding pattern type growth. The economy is growing at somewhere between 1.75 and 2.25 percent, maybe even a little weaker. That's where we are. Job growth will be somewhere between 75,000-100,000, the unemployment rate will drift back up to 8.3. That's where we are." But that's not where the Federal Reserve wants the economy to be, leading many on Wall Street to believe the Fed could announce new stimulus measures when it meets next week. Conway Gittens, Reuters