Ahead of the Labor Day weekend, market investors heaved a sigh of relief on Friday, September 3, as the U.S. jobs report for August showed no signs of a double-dip recession even though private employers continued to resist hiring new workers.
Payroll jobs fell by just 54,000 in August and the unemployment rate rose by only one-tenth of a percentage point, to 9.6% from 9.5% in July, according to the U.S. Labor Department's Bureau of Labor Statistics (BLS) report. From May through August, the jobless rate has remained in the range of 9.5% to 9.7%.
While government employment fell due to the loss of 114,000 temporary Census jobs, private-sector payroll employment continued to trend up modestly, rising 67,000 in August compared to a revised 107,000 gain in July from the 71,000 initially reported. Revised payroll jobs data for June and July showed 123,000 fewer jobs lost than previously reported.
Economists polled by Thomson Reuters had expected a decline of 100,000 in payroll jobs for August, with private employers adding 41,000 jobs, and consensus was for a 9.6% unemployment rate.
Jeff Kleintop, chief market strategist for independent broker-dealer LPL Financial in Boston, called Friday's employment summary "a Goldilocks report," saying that it was neither hot nor cold--and yet just right for investors whose anxiety about a possible double-dip recession has shown lately in market volatility over every blip of economic data that gets released.
"Today's employment report was better than expected, but not so much better than expected that it really changes the economic picture," Kleintop said. "We're still in a soft period for the economy. Economic growth will probably be slower in the second half of the year than it was in the first. That doesn't change the direction of economic growth, but it does take the fear of a double dip recession a little bit off the table."
In late morning trading, U.S. markets were up across the board. The Dow Jones industrial average stood at 10,370, 50 points higher than Thursday's close.
"Certainly, the market is welcoming this news today," Kleintop said. "The pace of private-sector job growth over the last few months has been pretty lackluster, somewhere around 50,000 or so a month. It's not quite enough to keep the unemployment rate from going higher, but not enough to suggest that we're slipping back into recession, either. It's that middle ground that the economy is muddling through. It was a relief to investors who had lately been pricing in a greater likelihood of a double-dip recession."
Read about last month's U.S. jobs report from the archives of InvestmentAdvisor.com.