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U.S. Economy Posts Dismal Hiring Numbers In August
Written by Tim Morral
Labor Department figures show that the economy added just 142,000 jobs in August, significantly lower than economists' forecasts. Is this a sign that the U.S. economy isn't as robust as it seems?
The August jobs report is out and it isn't as rosy as many hoped it would be. According to Labor Department statistics, the U.S. economy added 142,000 jobs in August, falling far short of economists' predicted gain of 200,000 jobs for the month.
The drop in jobs ended a streak that saw the economy adding more than 200,000 jobs for six consecutive months--the most promising trend since 2006. Many had viewed this trend as a sign that the economy was strong and that the labor market had finally rebounded.
On a positive note, the unemployment rate dropped to a six-year low of 6.1 percent, down from 6.2 percent in July. Combined with other factors, this has led many economists to dismiss the August hiring numbers as a bump in the road. In fact, some believe that the August numbers can't be trusted.
"I don't think it indicates much of anything," Kate Warne, investment strategist at the brokerage Edward Jones told MarketWatch. "Everything else suggests we saw better job growth in August."
Warne and other economists point out that the August jobs numbers were skewed by short-term events in the retail and auto sectors. A large supermarket chain in New England saw thousands of workers walking off the job to protest the firing of its CEO and the auto industry laid off fewer workers in July, decreasing the number of workers that were called back to work in August.
Economists also point to strong auto sales and exports as signs that the economy remains strong, despite August hiring figures. "I don't believe the numbers," Tim Hopper, chief economist at TIAA-CREF told the Washington Post. "Not only are they very weak, they just don't match anything else that's in the market right now."
Not surprisingly, the White House quickly chimed in on the August jobs report, noting that the economy has added 10 million private sector jobs since recovery began in 2010. "This figure is a marker of the progress that has been made, but also a reminder that more must still be done to create jobs, especially for the long-term unemployed, and grow the middle class," said Jason Furman, chairman of the Council of Economic Advisers.
Although it's useful to keep an eye on monthly jobs numbers, small business owners should remember that recruiting the right personnel is more important than closely monitoring national hiring trends. Regardless of what is occurring in the larger economy, businesses that focus on hiring the right people at the right times improve their ability to achieve meaningful business growth.
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