This morning's abysmal U.S. Department of Labor report, that for the first time since 1945, the government reported a net job change of zero, has already rattled markets (the Dow Jones Industrial Average is down 170 points). As for the unemployment rate, it stayed at 9.1 percent. What are the roots of the bleak report? Here's what economic writers are saying:
What we expected to hear in the report Catherine Hollander of National Journal explains:
Economists predicted the Labor Department's monthly report would show a modest gain of about 75,000 jobs with the unemployment rate holding steady at 9.1 percent. The report said that the number of new jobs roughly equaled the number of jobs lost. It takes about 125,000 new jobs per month to keep the unemployment rate steady.
Government cutbacks spurred the layoffs, writes David Dayen at FireDogLake:
In July, a government shutdown in Minnesota led to negative government numbers. This month’s numbers reflected all of those workers returning, a gain of 22,000. But government employment was still down, even with that, by a total of 17,000. Private employers gained by a thin 17,000 in August, canceling out the government employment loss. To the extent that any sectors did well, health care jobs gained in August. Manufacturing employment was basically flat (-3,000). The Verizon strike was a significant drag on the report, with a decline by 48,000 in the information industry. Since those 45,000 workers are back working at this point, if you want to be charitable you can say that the economy gained 45,000 workers in August, and it’s possible that future revisions will reflect that. But the zero is just too perfect.
The private sector underperformed as well, writes The Atlantic's Dan Indiviglio: "A few [industries] that had been adding jobs went negative in August. Manufacturing and retail stand out here. In August they lost 3,000 and 7,800 jobs, respectively. But in July manufacturing added 36,000 jobs, while retail added 26,400 jobs. That's a pretty significant one-month reversal."
Encapsulating the morning's news, Indiviglio cuts it two ways. "At best we're continuing to see stagnant hiring, with a labor market recovery remaining elusive. At worst, we're seeing the early signs of a double dip. We'll have to watch to see whether consumers pull back and employers begin laying off workers more broadly over the next few months to know for sure."
Caution: don't read too much into these numbers, writes Paul Solman at PBS News Hour:
Reminding us again that any given month's numbers are not to be heavily relied upon, the number of people saying that were employed increased by 331,000. How can the unemployment rate have held steady, then, at 9.1%. My guess is a whole slew of retirees -- 331,000? -- keeping the labor force constant. But I've looked at these numbers long enough never to bet on them.
Caution is further reinforced by the fact that the jobs -- added numbers from earlier in the summer were revised downward by about 60,000. So none of these numbers are to be fully trusted.