Weekly Jobs Report Does No Favors For The White House, Missing Expectations And Showing A Shrinking Labor Force

Friday, September 07, 2012 07:52
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Weekly Jobs Report Does No Favors For The White House, Missing Expectations And Showing A Shrinking Labor Force

Tags: economic indicators | Economic Outlook | Federal Reserve

In a mixed report, new jobs added in August came in at 96,000, well below the expected 125,000. But the unemployment rate fell to 8.1% from 8.3%.

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The private sector created 103,000 new jobs while the number of government jobs fell by 7000. Non-farm payrolls are said to have increased by 141,000 in July, revised downward from the previously reported 163,000.
 
The jobs numbers may seem confusing with numbers being revised with each new report. In an article on September 6, the day before this monthly report, the weekly report said that non-farm payrolls had been revised upward for July to 173,000 from 163,000.
 
These numbers were from Automatic Data Processing, Inc. or ADP. The service has reported numbers over the last several months that have been significantly off the revised numbers reflecting the more realistic scenario.
 
This points to the need to look at the unemployment picture from a macro perspective rather than a week-to-week or even a month-to-month scenario.
 
Nonetheless, political impact will result from the latest reports and the monthly report issued today is not doing the White House any favors.
 
The decline in the unemployment rate sounds good but it actually reflects a pullback in the numbers of people looking for jobs. This means more people are giving up the job hunt.
 
Jobs have been added to the US economy every month since September 2010, although the additions have been at a varied pace. The average number of jobs that have been added per month so far this year is 139,000. This compares to an average monthly gain of 153,000 jobs in 2011.
 
The Federal Open Market Committee (FOMC) meeting happens next week on September 12 and 13. The Fed is widely expected to take some type of stimulus action at the meeting. The unemployment figures are one of the top indicators the Fed is watching in making the decision to act.

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