The non-farm payroll report of the US economy for August was out on Friday night. It showed a net job gain of 0 for the month of August. Even accounting for the strike at Verizon, the report on headline job creation was weaker than expected. More disappointing were the drops in the aggregate weekly hours worked in August and the drop in average hourly and weekly earnings. The Index of Hours Worked is now below the level of June. The median duration of unemployment is higher. As pointed out by Mohamed El-Erian in this thoughtful article, the unemployment rate among 16-19 year olds is almost 50%. Unemployment rate for blacks is 16.7% and that of High School graduates is more than 14%. The long-term unemployment rate edged up to 16.2%. The pace of job creation in manufacturing has slowed lately compared to the first four months of the year.
On the brighter side, the labour force participation rate went up as did the Employment-Population Ratio. Employment went up as per the Household Survey. It is interesting that almost all of the job creation as per the Household Survey in the last one year happened in August 2011. So, we do not know if it would be subject to revisions later on. Overall, the report has to be classified as disappointing, to say the least.
Mohamed El-Erian’s article talks of the risks to social stability in this article. Check out this post by Tyler Cowen on why the fiscal stimuluses did not create jobs. Better still, if you have the time, check out the paper cited in the blog post. I have not done so yet.