Economy stalls on job growth with 9.1% jobless rate

The U.S. economy is stuck in neutral, the latest job figures show.

Employers added no net new jobs last month, and the unemployment rate remained unchanged at 9.1 percent, according to the U.S. Bureau of Labor Statistics (BLS) report Friday morning.

This was the worst jobs report since a small decline in September last year.

Expectations among economists and market watchers had been low, with estimates that the economy would add a paltry 70,000 to 80,000 jobs. In early stock trading this morning, all market indices were down more than 1 percent.

Job growth for the previous two months was also revised downward by 58,000, resulting in only 20,000 new jobs in June and 85,000 in July.

A strike at Verizon pulled about 45,000 telecom workers out of the numbers, while Minnesota’s returning state workers put 22,000 government workers back onto the payroll survey count.

Even with those puts and takes, the U.S. economy failed to add jobs for the first time in almost a year. The private sector added only 17,000 jobs while government jobs declined by the same amount.

The health care sector led in job growth, adding 30,000 positions, followed by professional and business services (8,000) and mining (6,000). Meanwhile, the Verizon strike caused the information industry to decline by 48,000, and manufacturing fell by 3,000. Most other private sectors were relatively unchanged.

The number of unemployed persons nationwide stood at 14 million in August, little changed from the previous month, according to a survey of households. Those only able to find part-time work rose by 430,000 to 8.8 million. Discouraged workers no longer seeking employment declined from a year ago by 133,000 to 977,000, according to the BLS survey.

Minnesota’s August employment figures, scheduled for release Sept. 15,should benefit from the returning state workers. But there were mixed signals for the state’s job outlook going forward.

On a positive note, a state report issued Thursday showed job vacancies in Minnesota climbing 32.1 percent in the second quarter from Q2 a year ago. Employers reported 54,700 openings during the quarter, compared with 41,400 openings one year earlier, according to the Minnesota Department of Employment and Economic Development (DEED).

The Job Vacancy Survey, conducted twice a year, reported that there were 36 unemployed Minnesotans for every 100 job vacancies, compared with 48 job seekers for each 100 jobs a year ago.

“These findings point to an improving economy that is returning to levels not seen since before the recession,” said DEED Commissioner Mark Phillips in a statement. “Minnesota employers haven’t reported this many job openings since the second quarter of 2007.”

About half of the job vacancies (54 percent) were in the seven-county Twin Cities region, which accounted for 29,500 openings. Compared with a year ago, job vacancies were up 43.2 percent in Greater Minnesota and 23.8 percent in the Twin Cities.

A separate report by Robert Half International, a temporary-employment agency specializing in professional services, showed only 2 percent of executives surveyed in Minnesota plan to add staff in the fourth quarter, compared with 12 percent nationwide.

In addition, 93 percent of Minnesota executives surveyed are at least somewhat confident in their companies’ prospects for growth while 41 percent cite challenges in locating skilled professionals.

Nationwide, 82 percent of hiring executives said they anticipate no change in staff levels, down from 90 percent three months ago.

A widely watched survey of purchasing managers showed slowing growth in Minnesota and across the nine-state Mid-America region.

For the fifth time in the past six months, the Business Conditions Index fell across the region, pointing to slowing regional growth for the next three to six months, according to Creighton University School of Business, which compiles the index.

The index for Minnesota was above neutral for the 25th straight month at 56.3 but down from 57.5 in July. An index value above 50 is a predictor of economic growth.

“Both durable and non-durable manufacturing firms in the state are making modest gains in business activity,” said Ernie Goss, Creighton University economics professor. “Medical equipment producers and metal product manufacturers are experiencing very healthy growth even as growth slows somewhat.”

For the region as a whole, he was less optimistic. “Despite healthy growth tied to agriculture, the Mid-America region is being negatively affected by pullbacks in business, consumer and local government spending. This month we asked supply managers what the expected sales growth was for their company for the rest of 2011. Approximately 22 percent expect a decline in business activity, 41.8 percent anticipate an upturn in sales and the remaining 36.2 percent expect no change in business activity for the rest of 2011.”

The regional index slumped to 52.0 from 54.1 in July, the lowest level recorded since December 2009. The drop “clearly indicates that regional growth is waning with an increasing likelihood of a recession. However at this time, our gauge is signaling slow to no growth, not a recession,” Creighton University reported.

The overall index, or Business Conditions Index, is a mathematical average of indices for new orders, production or sales, employment, inventories and delivery lead time and is the same methodology used by the national Institute for Supply Management. The national survey index registered growth for the 27th consecutive month.

Comments (5)

  1. Submitted by Ron Gotzman on 09/02/2011 - 12:17 pm.

    Obama has failed!! His spending, special interests stimulus package, and regulations have strangled our economy. Real change and hope come in 2012!

  2. Submitted by Gerald Abrahamson on 09/02/2011 - 01:22 pm.

    Nonsense. The “job creators” have failed. The govt shrank by 17k–so, using conservative-speak, that means fewer “leeches on society”. However, those very same conservatives actively choose to ignore the fact THEIR claims about jobs being created by “job creators” has usually failed for TEN consecutive years.

  3. Submitted by Jim Halonen on 09/02/2011 - 03:56 pm.

    What is more hilarious – Bush’s “Mission Accomplished”, or Obama’s “Summer of Recovery”? These presidents must get out of the marketing business and let their leadership speak for itself.

  4. Submitted by vickie graser on 09/02/2011 - 04:07 pm.

    what I don’t understand is why no one is honest about the new jobs that are generated in the manufacturing industry. Most of these are temporary positions and the others are temp to hire or with a potential to hire after a year. And then most of these companies do not hire.

  5. Submitted by Philip Freyre on 09/05/2011 - 01:55 pm.

    Unfortunately our economy functions under a ‘growth only’ premise. All plants, animals, and people are born, grow, mature, decline, and then die – the economy is non an exception. Plus, the bank and auto bail-outs that occurred did not cleanse money from the system. They merely converted public debts into private debts.

    We are now bumping into limitations we long ago chose to ignore that are limiting our growth: lack of credit, the end of cheap energy, little economic resilience, etc. Also, our money is loaned into existence, rather than coming into use debt-free.

    In 2008 Dirk Bezemer published “No One Saw This Coming: Understanding Financial Crisis Through Accounting Models” in which he listed many economists warning about the crash we experienced in 2008. Unfortunately many of them are warning of a bigger one yet to come.

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