Payrolls Drop by 93,000 Jobs As Jobless Rate Decli
Washington, Sept. 5-- Employers cut jobs for a seventh consecutive month in August, as the labor market remained in a funk despite a brightening economic outlook.
Nonfarm business payrolls declined by 93,000 last month, the Labor Department said Friday. The cut, the steepest in five months, brought total job losses since the start of the year to 431,000. The unemployment rate fell a tenth of a percentage point to 6.1%.
The sharp decline in payrolls was a surprise. Economists surveyed by Dow Jones Newswires and CNBC had forecast a gain of 12,000 jobs and for the unemployment rate to remain steady at 6.2%.
The numbers highlighted the peculiarity of the current economic recovery. The economy grew at a solid 3.1% annual rate in the second quarter, and forecasters are betting third-quarter growth will be at least 5%.
But employers keep cutting payrolls. One reason is a surge in productivity, which rose at 6.8% in the second quarter. That allows companies to delay hiring until profits improve and the economy recovery has solidly taken hold.
August's job cuts were broad based and remained heavy in manufacturing, a sector that suffered the brunt of the economic downturn. Manufacturers shed 44,000 jobs last month, raising the total of jobs lost in the sector to about 2.7 million over the last three years. President Bush on Monday announced he was creating a new assistant-secretary position in the Commerce Department to focus on revitalizing the factory sector.
The service sector cut 67,000 jobs, including 4,000 in retail trade. The professional and business-services industries cut 28,000 jobs, marking the first decline in five months.
Nevertheless, Treasury Secretary John Snow, speaking from a meeting in Thailand of Pacific Rim finance ministers, painted a rosy picture of an accelerating rebound with a pickup in jobs and loose monetary policy for the "indefinite future." In interviews with CNBC, he said the economy has "turned a corner" with "much stronger growth" ahead, including a "good resumption in job growth in the quarters that lie ahead."
The construction industry added 19,000 jobs, the largest increase in two months. The educational and health-services category added 24,000 jobs, rebounding after two months of decline.
The number of people in the labor force, which is comprised of those working and looking for work, remained largely unchanged, with just 10,000 giving up their job searches.
