New worries about the economy gripped America yesterday after a government report showed no job growth last month amid sagging consumer confidence.
Economists raised new concerns about recession after the Labour Department said private sector employment, previously the main engine for job growth as revenue-strapped governments shed workers, “changed little” in most major industries last month.
Only 17,000 private-sector jobs were added, down from a revised 156,000 in July. But that was offset by 17,000 jobs shed by government.
“The job machine has ground to a halt,” said Joel Naroff at Naroff Economic Advisers.
The report “clearly raises the spectre that the US has already entered or is at least close to enter another recession,” said Harm Bandholz at Unicredit.
It was the first time in 10 months that the world’s largest economy has not produced net growth in non-farm payrolls.
“The stagnation in US payroll employment is an ominous sign,” said Paul Ashworth, an economist at Capital Economics. “The broad message is that even if the US economy doesn’t start to contract again, any expansion is going to be very, very modest and fall well short of what would be needed to drive the still elevated unemployment rate lower.”
The Labour Department said the unemployment rate remained unchanged at 9.1 per cent from July. It was the 28th month the jobless rate has been at nine per cent and above, except for two.
The number of unemployed people was essentially unchanged, at 14 million.
The jobs data for August were the worst since September 2010, when the economy destroyed more than twice the number of jobs it created. The pace of job growth remains far below the numbers needed to reduce the high unemployment rate.
“Wrangling in Congress and the eventual deficit deal underscored the inability of government to jumpstart the labour market. Employers and consumers have lost confidence in the economy,” said Sophia Koropecky at Moody’s Analytics.
The report came amid political gridlock in Washington, as President Barack Obama’s Democrats and their Republican foes battle over how to achieve long-term deficit reduction.
Yesterday, Obama urged a divided Congress to pass a clean extension of the transportation bill, a measure that finances road construction and other infrastructure projects across the country.
“We need to pass this transportation bill and put people to work rebuilding America,” Obama said in his weekly radio and internet address.
The president warned that failure of Congress to act would be disastrous for the economy, costing nearly one million workers their jobs over the next year and almost $1 billion in highway funding after the first 10 days alone.
Confidence in the economy has taken a sharp hit as Americans watched politicians strike an 11th-hour deal on August 2 to avert a sovereign debt default, and Standard and Poor’s downgraded the triple-A US credit rating for the first time in history.
The August employment data came ahead of Obama’s much-awaited speech to a joint session of Congress on Thursday, in which he will lay out a plan to create jobs and stimulate the moribund economy, where growth fell below one per cent in the first half of the year.
The 9.1 per cent jobless rate is “a level that remains unacceptably high,” Katharine Abraham, a member of the president’s Council of Economic Advisers, said in a White House blog post.
Obama left the White House for a weekend at Camp David without commenting either on camera or on paper about the jobs number.
He is due to give a speech on the economy tomorrow, the Labour Day holiday, in the distressed hub of the auto industry, Detroit.
Other data in the August report were also troubling. The department sharply lowered its net new jobs for numbers June and July by a combined 58,000, and the average workweek and hourly earnings in the private sector declined.