Friday, September 3, 2010

Payroll Pain, Unemployment No-Gain

Fresh from the Bureau of Labor Statistics website at

Nonfarm payroll employment changed little (-54,000) in August, and the unemployment rate was about unchanged at 9.6 percent, the U.S. Bureau of Labor Statistics reported today.

Government employment fell, as 114,000 temporary workers hired for the decennial census completed their work. Private-sector payroll employment continued to trend up modestly (+67,000).

The number of unemployed persons (14.9 million) and the unemployment rate(9.6 percent) were little changed in August. From May through August, thejobless rate remained in the range of 9.5 to 9.7 percent.

Yesterday, I wrote that I was somewhat pessimistic regarding today’s figures.  Consensus was for a loss of 90,000 to 100,000, so today’s figures are a surprise on the upside.

The economy, while recovering very slowly, just doesn’t have the horsepower for the private sector to add the hundreds of thousands of jobs needed just to offset population growth (somewhere between 125,000 to 200,000, depending on whose demographics you follow).  Instead, it’s losing jobs.

And for the latter, extension of jobless benefits the prior month likely encouraged the discouraged to re-encourage themselves and re-enter the job market.  I thought we’d see an increase to 9.7% and floated the possibility of 9.8%.  That didn’t materialize either, but the BLS’ press release language suggesting that an unemployment rate in the range of 9.5% to 9.7% isn’t going in the right direction.

The White House economic team will try to spin these numbers as best they can, but the fact of the matter is that the economy is weak and there aren’t many bright spots to point at and develop some enthusiasm.

Minor Update: BLS’ choice of language is creative, isn’t it?  The unemployment rate inched up, but they write that it was “about unchanged.” I wonder what the language would have been if the unemployment rate had inched down?

Another Minor Update: The report from BLS notes that temporary employment increased by 17,000 in August.  The initial spin on this is that an increase in temp hires signals that companies are looking to boost their labor force; that an increase in temps portends an increase in permanent payrolls.  That’s true, but temp payrolls have been showing increases of nearly three times the 17,000 figure from last fall through late spring.  I don’t have the figures in front of me (and can’t dig for them right now because of “day-job” responsibilities), but I want to say that from September 2009 through May 2010, the temp hires were on the order of 40,000 to 50,000 each month.  A slowdown in temp hires from those rates to the current 17,000 shows weakness.

Gimme some feedback in the comments.