By MOTOKO RICH
c.2010 New York Times News Service
U.S. businesses added more jobs in the past three months than originally estimated, calming fears of a double-dip recession. Yet the pace of growth signaled that the wheels of the economic recovery were still spinning in place.
The private sector added 67,000 jobs in August, with some of the strongest gains in health care, food service and temporary help, according to the Labor Department. That was higher than consensus forecasts, and the government upwardly revised its numbers for June and July, suggesting that job creation was slightly stronger over the summer than originally reported.
But the continuing wind-down of the 2010 Census, as well as state and local government layoffs, led to an overall loss of 54,000 jobs in August.
With businesses adding about half the number of positions needed simply to accommodate population growth - much less dent the ranks of the jobless - the unemployment rate ticked up to 9.6 percent, from 9.5 percent.
"The overall picture is one where the labor market is still kind of treading water," said Joshua Shapiro, chief U.S. economist at MFR Inc. "It's better than sinking, but it's certainly not surging ahead."
The August numbers, which pushed up stock gauges Friday, are likely to do little to assuage political pressure on the Obama administration in the run-up to the midterm elections.
Speaking from the White House Rose Garden on Friday morning, President Barack Obama called the latest jobs report "positive news" but said he would be unveiling "a broader package of ideas next week" to shore up the flagging economy, although he declined to give specifics. The president once again urged Congress to pass a stalled bill that would offer tax breaks to small businesses and create a $30 billion program to encourage community banks to lend.
"There's no quick fix for this recession," he said. "The hard truth is that it took years to create our current economic problems, and it will take more time than any of us would like to repair the damage."
Optimists were taking their good news where they could. By the end of the day, the Standard & Poor's 500-stock index was up 1.32 percent, continuing a rally that began in the middle of the week. Market reaction to the jobs data Friday was tempered somewhat by a report that said growth in the services sector had slowed in August.
"I can say with greater confidence that a relapse into recession now looks even more unlikely," said Bernard Baumohl, chief global economist at Economic Outlook Group. "And the momentum is gradually building for a stronger fourth quarter and a better 2011."
The Labor Department revised upward its private sector number for July, raising the number of jobs added to 107,000, from the 71,000 originally reported. And private sector hiring in June, originally reported at 83,000 and lowered to 31,000, was raised again to 61,000.
Baumohl, who also noted that consumer confidence had edged up in recent surveys and that a closely watched index of manufacturing showed earlier this week that employment was increasing, pointed to the fact that the jobs report showed that average weekly earnings rose slightly, to $774.97 in August from $772.92 in July.
The average workweek among private workers was unchanged at 34.2 hours, but among production and nonsupervisory employees, it edged up to 33.5 hours, from 33.4. Economists generally see such increases in pay and workweeks as an indicator that companies are pushing their existing workers harder to meet rising demand, moves that tend to presage hiring.
According to the government, manufacturing, which has been a bright spot since the beginning of the year and remains so in some other measures, showed a surprise setback in the government numbers released Friday.
For the first time since January, the sector lost jobs, a total of 27,000 in August. The Labor Department said the decline was in part attributable to the fact that carmakers did not shut down plants in July as they usually do, throwing off seasonal adjustments in August.
Thomas J. Duesterberg, the president of the Manufacturers Alliance-MAPI, said that the organization's members were slowly adding workers.
"It's not the type of robust growth that we would all like to see and would need to see if we're ever going to get back to the levels that we had before the recession," Duesterberg said, "but nonetheless it's growth."
Slow growth is certainly cold comfort to those who are out of work and seeking a job, a number that rose to 14.9 million in August, from 14.6 million in July. In one small sign of improvement, the number of people out of work for 27 weeks - which grew alarmingly throughout the recession and its aftermath - declined by 323,000, to 6.2 million in August from 6.6 million in July. The median length of unemployment fell to 19.9 weeks in August, from 22.2 weeks in July.
The so-called underemployment rate - which includes people whose hours have been cut as well as those who would like work but have given up on the search out of discouragement, rose to 16.7 percent in August, compared with 16.5 percent in July. The number of people who were working part time because they could not find full-time work rose to 8.9 million in August, from 8.5 million in July.
Some struggling with unemployment say they will settle for any work, even with pay cuts.
Susan Howard, a Leander, Texas, single mother with a master's degree, said she was laid off from her software on-demand job in June and since then has been interviewing for jobs that would pay half her previous salary.
But with only $406 a week in benefits and some child support, she has stopped paying her mortgage, deferred her car payments, reached out to a ministry for help with utility bills and enrolled her son in a reduced-cost school lunch program.
"My resume is posted on every career resume site there is," she said. "I have been called in for three interviews, but none of them have ever gotten back to me."
There is unlikely to be much relief in the coming months. Most economists are forecasting lukewarm growth in the second half of the year. Growth in the second quarter was revised down last week, to 1.6 percent from 2.4 percent.
Jan Hatzius, chief U.S. economist for Goldman Sachs, said he believed the economy would grow at about 1.5 percent in the second half. That is not nearly enough to start bringing down unemployment in a significant way.
"Overall you generally need 3 percent GDP growth or more to start making a dent in the unemployment rate on a consistent basis," said Hatzius, referring to gross domestic product.
He noted that Friday's report might end up being something of a Catch-22 for government action, particularly from the Federal Reserve. Last week, the Fed chairman, Ben S. Bernanke, said the central bank was prepared to act if the economy continued to weaken, but Hatzius said Friday's labor market numbers might cause the Fed to hold its powder.
"If you had a really bad report, that would spur people into action more," Hatzius said. "But this is going to reduce the need for immediate action."