9/5/2014 Jobs Report: U.S. Economy Added Just 142,000 Jobs In August, Unemployment Down To 6.1%

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INVESTING (/INVESTING) 9/05/2014 @ 8:44AM 3,407 views

Jobs Report: U.S. EconomyAdded Just 142,000 Jobs InAugust, Unemployment DownTo 6.1%

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Samantha Sharf (http://www.forbes.com/sites/samanthasharf/) Forbes Staff

I cover markets, millennials and money.

9/5/2014 Jobs Report: U.S. Economy Added Just 142,000 Jobs In August, Unemployment Down To 6.1%

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The Bureau of Labor Statistics released asignificantly weaker than expected August jobsreport Friday morning.

Employers added just 142,000 jobs last month,sharply lower than the 225,000 economists wereanticipating and the smallest monthly gain of 2014.The unemployment rate, which is drawn from adifferent survey of households, dropped from 6.2%to 6.1%.

The July payroll number

(http://www.forbes.com/sites/briansolomon/2014/08/01/jobs-report-u-s-economy-adds-209000-jobs-in-july-unemployment-ticks-up-to-6-2/) was

9/5/2014 Jobs Report: U.S. Economy Added Just 142,000 Jobs In August, Unemployment Down To 6.1%

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revised up from plus 209,000 jobs to plus 212,000 but June’s count(http://www.forbes.com/sites/samanthasharf/2014/07/03/jobs-report-u-s-economy-added-288k-jobs-in-june-unemployment-dropped-to-6-1/) wasrevised down from 298,000 jobs added to 267,000. Total employment gainsthose months were therefore 28,000 lower than what BLS — a division of theDepartment of Labor — previously reported. Job growth has averaged 212,000for the last twelve months.

“The number was a surprise and a disappointment but we do not believe thatit indicates a slowdown in the US economy,” wrote Joseph Lake, U.S. analystfor The Economist Intelligence Unit, in a note on the report. He added thatthere is a “reasonable chance” the number will be revised up as othereconomic data has shown strength in recent month. (For example, last weekthe Bureau of Economic Analysis increased its estimate of real gross domesticproduct (http://www.forbes.com/sites/samanthasharf/2014/08/28/u-s-gdp-grew-4-2-in-the-second-quarter-2013-up-from-first-estimate/)for the secondquarter to 4.2%.)

Peter Cappelli, a management professor at the University of Pennsylvania(http://www.forbes.com/colleges/university-of-pennsylvania/)’s WhartonSchool (http://www.forbes.com/colleges/university-of-pennsylvania/wharton-school/) and director of its Center for HumanResources, agreed in a phone call Friday morning that the number is likely tobe revised as new data comes in. According to Phil Orlando, chief equitystrategist at Federated Investors, August is typically revised more than othermonths thanks to quirks like teachers coming back to work and retailersgearing up for the back to school and holiday shopping seasons.

Nevertheless Cappelli called the numbers “worrying” as they reflect adownward trend throughout the summer.

Immediately following the news the S&P 500, The Dow Jones IndustrialAverage and Nasdaq Composite sunk farther into the red following adownward trend seen leading up to the pre-bell release. The indices quicklyreversed that momentum trend turning mixed. With economic data largelyimproving investors have questioned whether the Federal Reserve will raiseinterest rates sooner than previously expected(http://www.forbes.com/sites/samanthasharf/2014/08/20/fed-minutes-show-some-pushing-for-rate-hike-sooner-rather-than-later/). Such a weakreport likely quells some speculation on that front.

In a call after the release Orlando said he believes stocks rallied Fridaymorning because it “inconceivable” that, based on this report, famously dovishFed Chair Janet Yellen (http://www.forbes.com/profile/janet-yellen/) willwalk into the Federal Open Market Committee meeting later this month anddemand they raise interest rates sooner than previously planned. “The onlypart of this report that is going to make Yellen smile is the wage number,” said

9/5/2014 Jobs Report: U.S. Economy Added Just 142,000 Jobs In August, Unemployment Down To 6.1%

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Orlando. Average hourly earnings gained 6 cents in August to $24.53, bringingthe year-over-year growth rate to 2.1%. The workweek was 34.5 hours for thesixth month in a row.

The labor force participation rate was down from 62.9% to 62.8%, whichOrlando and Cappelli noted accounts for the drop in unemployment rate andshows that number is declining for the wrong reasons. At 59% theemployment-population ratio had remained unchanged for three months.

The sector with the most new jobs was businessservices with 47,000 jobs added. Healthcare,hospitality and construction added 34,000 jobs,22,000 jobs and 20,000 jobs respectively.Employment was unchanged in manufacturing,logging, wholesale trade, transportation andwarehousing, information, financial activities andgovernment. Retail trade lost 8,000 jobs.

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9/5/2014 Jobs Report: U.S. Economy Added Just 142,000 Jobs In August, Unemployment Down To 6.1%

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