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Silver linings in a lousy jobs report

Friday, September 05, 2014 - 02:36

The headline number in August payroll data and the report's details suggest the jobs market may have hit a snag but economists say not so fast. Jeanne Yurman reports.

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The August payroll numbers completely missed forecasts. Last month the U.S. economy cranked out 142,000 new jobs - not the expected 225,000. It is the weakest monthly gain this year. And beyond the headline number, more ugly details: June and July's numbers were also revised lower. The labor force participation rate fell as more Americans gave up looking for work. The recently revived manufacturing sector stalled. And retail jobs, a major source of employment, declined for the first time since February. After the labor market had a fairly robust second quarter, the latest report suggests the jobs market may have hit a snag. Some experts say not so fast. Chief Economist Nariman Behravesh at IHS, however, notes the jobs report's upsides. SOUNDBITE: NARIMAN BEHRAVESH, CHIEF ECONOMIST, IHS (ENGLISH) SAYING: "Wage gains were quite strong. Average hourly earnings were up. Long term unemployment numbers down. It's down around where it was in 2009. The rate of people who are underemployed, people, who want to work full time but are only finding part time jobs, that's going down. So there was good news in this as well." And White House spokesman, Jason Furman, says the numbers were a blip in a broader, more positive context. SOUNDBITE: JASON FURMAN, CHAIRMAN OF THE COUNCIL OF ECONOMIC ADVISERS, WHITE HOUSE (ENGLISH) SAYING: "The general trend of jobs: up. 207(thousand) a month on average over last three months. Over 2.4 million jobs added in the past year and we now have the longest private sector streak of job creation on record. 54 straight months. 10 million jobs added." Wells Fargo's John Silvia thinks that the latest report shows growth but not accelerating job growth, conflicting with other recent economic indicators. SOUNDBITE: JOHN SILVIA, CHIEF ECONOMIST, WELLS FARGO (ENGLISH) SAYING: "It's definitely a yellow flag that we need to start rethinking the growth cycle. It seems as if there was some improvement overall in the economy in the last three to six months, but not the acceleration that a lot of people are starting to reject. More like maybe 2.5 percent economic growth not three to four." While disappointing, the report didn't seem to shake experts' forecasts for a rate hike by the Fed. Interest rate futures still reflect a move in July. Until the next payrolls report, to gauge when the central bank might act, economists say the major data points they're watching are tied to consumer inflation.