Job growth ground to a halt last month in the strongest evidence to date that businesses were hit as hard as consumers by a sharp loss of confidence during the month spawned by Washington’s debt crisis and severe turmoil in the world’s financial markets.
The fall in job growth to zero from 85,000 in July, reported by the Labor Department Friday morning, represents the sharpest deceleration of job gains since the Great Recession, and was influenced by a strike of Verizon workers that subtracted nearly 50,000 jobs during the month.
Reflecting the static jobs picture, the U.S. unemployment rate was unchanged at 9.1 percent, the department said.
The only industries to see significant job growth were health care, where employment expanded by over 35,000, and professional and business services, where job gains totaled 28,000. Every other industry from manufacturing to retail trade registered only small gains or losses.
Job losses in government slowed somewhat to 17,000 from 71,000 in July as Minnesota workers shut out by that state’s budget impasse returned to work during August.
“Growing uncertainty about the political landscape in the U.S. and about the global economic outlook has taken a toll on business sentiment and lowered firms’ willingness to expand,” said Harm Bandholz, economist at Unicredit Markets.
“Even without the impact of the Verizon strike, these numbers are highly disappointing,” he said. “While companies have not started to lay off people — which would have led to a rise in jobless claims — they cut back on new hires,” he said.
Mr. Bandholz noted several other signs of weakness in the jobs report: Both the average workweek and average hourly wages declined during August and nearly 60,000 fewer jobs were created in June and July than the department previously reported.
He noted that the Boston committee of economists that determines whether the U.S. has entered a double-dip recession pays particular attention to the trend in job growth.
“The flat employment in August plus downward revisions to the previous two months clearly raises the specter that the U.S. has already entered or is at least close to entering another recession,” he said.
John Silvia, chief economist at Wells Fargo Securities, said the tepid jobs report will be disappointing to workers and investors alike.
The stock market immediately nosedived at the opening of trading Friday morning after the report was released, with the Dow Jones Industrial Average plummeting 236 points to 11,258.
“The trend in jobs is a slowdown,” Mr. Silvia said, with average job gains declining this year from a healthy 166,000 a month in the first quarter to 105,000 in the second quarter and only 28,000 in the current quarter.
The prospect for getting jobs is so poor that people keep dropping out of the job market two years into the economic recovery, and that is holding the unemployment rate lower than it might otherwise be, he said.
“That’s not the way you want to keep unemployment down,” he said. At the current rate of job growth, unemployment is likely to linger above 9 percent into next year, he said.
• Patrice Hill can be reached at phill@washingtontimes.com.
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