Economy adds 144,000 jobs; jobless rate dips to 5.4 percent
Saturday, September 4, 2004
WASHINGTON -- America's payrolls picked up in August, with the economy adding 144,000 jobs, slightly less than economists were forecasting and highlighting the slow and uneven recovery in the labor market that jobseekers have braved.
The unemployment rate dipped to 5.4 percent last month from 5.5 percent in July, the Labor Department reported Friday. While the new jobless rate was the lowest since October 2001, the drop in the unemployment rate in August came as people left the work force for any number of reasons. Economists were predicting the jobless rate to hold steady in August.
The gain in payrolls was short of the 150,000 net jobs that economists were calling for. However, it represented the biggest jobs gain since May and marked the 12th month in a row that payrolls grew.
"As far as employment growth goes, it was okay. Nothing good, but nothing terrible," said economist Joel Naroff, president of Naroff Economic Advisors. "For jobseekers, it's an environment that provides them with some opportunities but finding jobs is still not going to be that easy yet."
Job gains for July were revised up to 73,000, still a lackluster number but an improvement from the 32,000 advance first estimated. Payrolls for June also were revised up to show a larger gain than first reported.
The latest snapshot of the jobs climate comes just two months before the presidential election. President Bush, who hurried back to the campaign trail after accepting the Republican party's nomination for a second term Thursday, and his Democratic rival, John Kerry, joust frequently over the health of the economy and the availability of jobs.
The new employment report "shows that our economy is strong and getting stronger," Bush said Friday at a campaign stop in Pennsylvania. "Our growing economy is spreading prosperity and opportunity and nothing will hold us back."
The Kerry campaign, however, had a different view of what the latest employment figures mean for the economy. "Economically, after losing jobs, you're supposed to have ever faster job growth to make up for it. That's not what we're getting. We're getting mediocre, treading water job growth," the campaign said in a statement.
Bush says his tax cuts have helped the economy rebound and that making those tax cuts permanent will spur more job creation. Kerry contends Bush's policies benefit the wealthy, squeeze the middle class and aren't producing significant job growth.
The economy has lost 913,000 jobs since Bush took office.
On Wall Street, the report failed to inspire investors. The Dow Jones industrials were off 8 points and the Nasdaq was down 20 in morning trading.
The payrolls figure and the unemployment rate can sometimes offering differing impressions of the labor market because they are derived from two separate statistical surveys.
The unemployment rate is calculated from a survey of around 60,000 households in which people are asked to state whether they have jobs or are looking for work. The unemployment rate in August fell as the labor force shrank by 152,000 from the previous month.
The survey used to calculate the payroll figure -- seen as a better barometer of the labor market's health by many economist -- is based on information from about 160,000 businesses and government agencies, covering roughly 400,000 individual work sites.
The Labor Department said that Hurricane Charley, which tore through Florida on Aug. 13 -- the week both surveys were conducted -- had no discernible impact on the numbers.
Federal Reserve Chairman Alan Greenspan had said that the economy hit a "soft patch" in June. However, he and his Fed colleagues expressed confidence last month that economic activity would pick up.
In August, however, retail and automobile sales came in sluggish, consumer confidence dropped and manufacturing activity grew at a slower pace.
The Federal Reserve, in a bid to keep inflation from becoming a problem, boosted short-term interest rates twice this year. That has left a key rate controlled by the Fed at 1.50 percent, still low by historical standards. The Fed's next meeting is Sept. 21. Economists believe the Fed will push rates by another one-quarter percentage point at that time.
Economists want to see at least 200,000 net jobs added a month on a consistent basis before declaring the labor market fully healed.
In August, factories added 22,000 jobs, up from 6,000 the previous month -- an encouraging sign for a sector that was hardest hit by the 2001 recession and has struggled mightily to get back on firm footing.
Employment at professional and business services expanded by 32,000 last month, following a gain of 47,000 in July. Jobs in the education and health care industries grew by 45,000 in August, up from a gain of 16,000 in July. Government jobs expanded by 24,000 in August, following a 13,000 gain.
But retailers cut 11,000 positions in August, the second straight month of jobs losses. Employment in a category that includes transportation dipped in August as did jobs in the information services sector.
There were 8 million people unemployed in August, with the average duration of 19 weeks without work, up slightly from 18.6 weeks in July.