September 2, 2011 / 1:06 PM / in 6 years

Snap analysis: Payroll data raises recession risks

<p>Martell Gerald (R) applies for a job at the Bank of America booth at the Congressional Black Caucus For The People Jobs Initiative job fair in Los Angeles, California in this August 31, 2011 file phto. REUTERS/Jonathan Alcorn/Files</p>

WASHINGTON (Reuters) - U.S. jobs growth evaporated in August, increasing the risk the country could slip back into recession and raising pressure on President Barack Obama and the Federal Reserve to act quickly to boost growth.

The U.S. economy did not generate any jobs last month, falling short of Wall Street’s already low expectations and suggesting a bruising political battle over the budget in Washington spooked employers.

The U.S. Congress let a debate over spending go down to the wire in early August, nearly leaving the government unable to pay its bills. The country’s debt was then downgraded by a major rating agency.

The payroll reading was bad even considering a major strike at Verizon Communications that left 45,000 workers temporarily idle.

After telling the world last month the U.S. central bank needed time to weigh its options, Fed Chairman Ben Bernanke is now under increased pressure to unveil new stimulus measures. Fed policymakers meet on September 20-21.

Obama will probably hope this report will convince Congress to back a jobs plan he is expected to unveil this month. The report showed the unemployment rate holding steady at 9.1 percent. Without a substantial improvement in employment, Obama risks losing his re-election bid in November 2012.

Following are key details from the Labor Department figures:

* Adding to the bad news of zero jobs created in August, the payrolls count for June and July was revised to show 58,000 fewer jobs added than previously reported.

* Government payrolls dropped 17,000 in August, despite the end of a government shutdown in Minnesota that saw thousands of state workers return to their jobs.

* The number of the unemployed out of work for 27 weeks or more fell by 151,000. That should provide a silver lining to the data for Bernanke, who said last Friday that he was worried about long-term unemployment because it could do lasting damage on the economy.

* In general, the survey of households from which the jobless rate is derived provided another bright spot. The size of the workforce grew, but so did employment by this measure. However, economists focus on the payrolls survey, which has a much larger sample size.

* Only 58.2 percent of the total population had a job, though the number was up from 58.1 percent in July. Still, the reading was close to levels last seen in the early 1980s when fewer women worked.

* Temporary help -- often viewed a harbinger of permanent hiring -- increased by 4,700.

* The length of the average work week dipped, while the aggregate weekly hours index -- a measure of the total work effort -- dropped 0.2 percent from a month earlier.

Reporting by Jason Lange

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