Jobs: Employment Falls for Third Straight Month in August - Consumer Spending Hurt
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Jobs
scarcity is hurting consumer spending, which normally accounts for
about two-thirds of U.S. economic activity, leaving the recovery from
the worst recession in 70 years sputtering.
Growth
slowed markedly in the second quarter and Fed Chairman Ben Bernanke has
said the central bank stands ready to take fresh measures to support
the economy if needed.
Minutes of
the Fed's last policy meeting released this week showed several
policymakers felt the outlook would have to deteriorate "appreciably" to
spur fresh monetary support.
The
Fed slashed overnight interest rates to near zero in December 2008 and
has vowed to keep them ultra-low for an extended period to aid the
recovery. In addition, it bought about $1.7 trillion in mortgage-related
and government debt in a further effort to lower borrowing costs.
Bernanke said last week that further purchases were a top option if officials felt more economic support was needed.
"The
economy is in a bit of a lull and gauging how long we are stuck in this
rut will determine if the Federal Reserve needs to step in," said
Sweet.
The economy's poor health
has weakened President Barack Obama's popularity and could see
Republicans wrestle control of Congress away from the Democratic Party.
Typically
in midterm elections when there is no presidential race the party in
power in the White House suffers losses, but analysts say the drubbing
Democrats could face may be unusually severe.
The
weakness in employment last month was probably spread across all
sectors. Employment in the goods-producing sector was likely held back
by lackluster manufacturing payrolls, which had received a boost from
some automakers who did not shut their plants for the traditional summer
break.
While construction
employment probably got a lift from the return of 10,000 strikers, the
gain was likely neutralized by a downturn in residential construction
following the end of a popular homebuyer tax credit.
Employment
gains in the dominant service sector were likely muted given tepid
spending. However, temporary help services, seen as a harbinger of
permanent hiring, probably rebounded after falling in July for the first
time since last September.
Analysts
believe companies that need to add workers will opt for temporary help
given the uncertain outlook and some think the length of the average
workweek, which has barely budged this year, could grow longer in a sign
employers prefer to add hours for existing workers rather than hire new
staff.
However, the median forecast for the average workweek in the Reuters poll is unchanged at 34.2 hours.
(Editing by James Dalgleish)
