Unemployment Rate Rises to 6.1%

Unemployment Rate Rises to 6.1%

http://www.nytimes.com/2008/09/06/business/economy/06econ.html?_r=1&hp&oref=slogin


By MICHAEL M. GRYNBAUM
Published: September 5, 2008

The unemployment rate jumped to 6.1 percent in August, its highest level in five years, as the erosion of the job market accelerated over the summer.
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Labor Department News Release

Employers cut 84,000 jobs last month, more than economists had expected, and the Labor Department said that more jobs were lost in June and July than previously thought.

So far, 605,000 jobs have disappeared since January. The unemployment rate, which rose from 5.7 percent in July, is now at its highest level since September 2003.

Jared Bernstein, economist at the Economics Policy Institute in Washington, said eight months of consecutive job losses had historically signaled that the economy was in a recession.

“If anyone is still scratching their head over that one, they can stop,” Mr. Bernstein said.

Stocks fell after the release of the report, with the Dow Jones industrials down about 100 points after about 40 minutes of trading.

Layoffs have picked up speed in the last three months, contrary to earlier estimates that they had slowed. The government now says that 100,000 jobs were lost in June, doubling its original estimate.

Raises have not kept up with the rising cost of living, putting more pressure on workers as high gasoline prices and the fastest inflation in decades hurt their spending power.

Hourly wages for rank-and-file workers — those not in supervisory or managerial positions — grew 3.6 percent since August 2007, below the rate of inflation.

The report quickly became bait for the back-and-forth of the presidential campaign. Senator Barack Obama, the Democratic candidate, said his opponent, Senator John McCain, “is intent on continuing the economic policies that just this year have caused the American economy to lose 605,000 jobs.”

“Today’s jobs report is a reminder of what’s at stake in this election,” Mr. Obama said in a statement.

The government said last month that the economy grew at a relatively brisk 3.3 percent clip from April to July, with businesses benefiting from foreign demand for American-made goods.

But little of that activity, analysts said, has translated to helping the average American worker.

“Whatever is growing the economy, it’s not showing up in the jobs market in any way at all,” Mr. Bernstein said.

Officials at the Federal Reserve believe activity will slow sharply for the rest of the year before returning to a faster growth rate in 2009.Manufacturing jobs were hammered again in August, with 61,000 workers losing their jobs. Nearly 60,000 administrative workers, including secretaries and temp workers, were laid off.

Gains came in the education and health care industries, which added a total of 55,000 jobs. But those gains were offset by loses at restaurants, auto dealers and factories that make parts for cars and other transportation equipment.

Friday’s report from the Labor Department was eagerly anticipated by investors who have become increasingly skittish about a global slowdown. The jobs data is considered the most reliable snapshot of the nation’s economy in any given month.

Stock markets fell sharply on Thursday, with the Dow Jones industrial average shedding 345 points, and the employment report could result in another day of volatile swings in the major indexes.
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