The economy showed no job growth in August, the first time there has been no increase in net jobs in the United States in 11 months.þþThe flat performance in the job market was down sharply from a revised 85,000 gain of jobs in July, the Labor Department said Friday, and was far below a consensus forecast by economists of 60,000. The unemployment rate stayed constant at 9.1 percent in August.þþThe nonfarm payrolls numbers were unchanged in August after a prolonged increase in economic anxiety that began with the brinksmanship in Washington’s debt-ceiling debate and was followed by the country’s loss of its triple-A credit rating, stock market whiplash and renewed concerns about Europe’s sovereign debt.þþThe jobs figure, a monthly statistical snapshot by the Department of Labor, may appear more negative because it does not include 45,000 Verizon workers who were on strike when the survey was taken.þþStocks dropped more than 2 percent in early trading as Wall Street reacted to the unexpectedly weak report.þþEconomists blamed both sluggish demand for goods and services and the heightened uncertainty over the economy’s direction for the slow pace of job creation, saying political deadlock was in effect creating economic paralysis.þþ“Business confidence surveys have uniformly pointed to businesses who are not laying off workers, but who are holding off on hiring while they wait for a clearer outlook — an outlook that became much cloudier and more volatile” beginning with the debt-ceiling battle in July, said Ellen Zentner, the senior United States economist for Nomura Securities.þþThere seems to be a consensus among economists that the United States will skirt a double-dip recession but that growth will linger at levels barely perceptible, much less comforting, to Americans without jobs.þþ“We’ve got at least another 12 months of difficulty to go through,” said Steven Ricchiuto, United States economist for Mizuho Securities USA. “I know that doesn’t help politicians who are worried about the elections.”þþThe poor showing is likely to be seized on by President Obama in his prime-time address to Congress on Thursday as proof that bolder government action is needed to create jobs.þþThere is considerable skepticism that any ambitious plan to bolster job growth would be politically feasible. But several economists said that given the fragility of the recovery, the payroll tax cut and extended unemployment benefits, both set to expire at the end of the year, should be renewed.þþ“It’s probably not the time for adding to fiscal drag,” said Jim O’Sullivan, the chief economist for MF Global. He said that together the tax cut and unemployment account for 1 percent of the gross domestic product.þþSome analysts downgraded their forecast for the jobs numbers on Thursday based on new economic indicators including weaker online job advertising, a rise in announced layoffs and a growing pessimism about the job market by consumers. A major report on manufacturing showed slowing employment growth and shrinking production and new orders.þþBut other indicators suggested that fears of recession have outstripped reality. Consumer confidence dropped sharply and pending home sales dipped, but in July retail sales increased and orders for durable goods — expensive items often purchased on credit — were up 4 percent. On the other hand, a report on chain-store sales indicated slack back-to-school shopping, further slowed by Hurricane Irene.
Source: NY Times
