Two Bright Spots in an Anemic Jobs Report

by Rea Hederman

The unemployment rate climbed to 9.6 percent as a result of many new entrants into the labor market (about half a million workers). This increase offset the July decline in the labor force, and it indicates that the weak July report was more statistical noise than a new downward trend.

Adult males accounted for two-thirds of these entrants, while the labor force participation rate for women remained flat. The problem is that only about half of these new entrants were able to find work, as private-sector jobs remain scarce. This is another rather anemic jobs report and indicative of the slow, painful climb to recovery.

Private-sector jobs increased by 67,000, while 114,000 temporary census jobs disappeared. The temporary census jobs make the usual job-creation number worthless, since they can cause an artificial increase in the number of jobs created in the spring and an artificial decline in jobs in the summer months. Excluding the census jobs, the number of federal and local government workers increased while the number of state workers declined.

There are two big bright spots: the average hours worked and temporary employment numbers. The average number of weekly hours worked climbed to 33.5 hours. That’s the highest level since October 2008, except for May of this year when the labor market was growing much more robustly. Last month, temporary services declined, which was worrying. This month’s report shows modest growth in temporary services and makes the July downturn seem like a statistical blip. These are both positive indicators that employment will continue expanding, albeit at this very modest pace.

The manufacturing sector had job losses for the first time this year, but construction increased hiring for one of the few months since the real estate collapse in 2007. As usual, most of the private-sector hiring was in health care, which accounted for twice as many new job opportunities as any other sector.

The August report was better than the July jobs report but not by much. While the increased hiring and the increase in temporary services is a positive sign, job growth is likely to remain sluggish. Businesses are reluctant to add new permanent employees as they are uncertain about the overall economy and the impact of the tax increases and new regulations scheduled for next year.

Rea Hederman is senior policy analyst in the Heritage Foundation’s Center for Data Analysis.

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