The Labor Department on Friday reported that the economy added 169,000 nonfarm jobs in August, bringing the unemployment rate down to 7.3 percent, from 7.4 percent in July. The report, which comes during an uneasy month in Washington, D.C., marks the 35th straight month of job growth, though much of it has been sluggish.
Make that very sluggish. The Labor Department also lowered job gains in June and July by a total of 74,000, bringing July's jobs gains to a paltry 104,000 — the lowest increase in more than a year, and a worrisome sign that the economic recovery is far weaker than previously thought.
In addition, the slight drop in the unemployment rate was mostly the result of people dropping out of the workforce entirely. About 312,000 people stopped looking for jobs in August, bringing the participation rate to 63.2 percent, the lowest it's been in 35 years.
"What that essentially means is that fewer working-age, more or less able-bodied people are either working, or trying to work, than at any point in the past 35 years," says Paul Vigna at The Wall Street Journal. "The problem is that if you don't have people working, or that few people working, it makes it very hard to generate the kind of economic activity and growth that we desperately need right now to break out of this muddle-through, yeah-but, torpor we're stuck in."
Reuters' Felix Salmon had this to say:
With the participation rate still falling, the unemployment rate is less relevant than ever. And all the Fed board knows it.
— felix salmon (@felixsalmon) September 6, 2013
As Salmon suggests, all eyes are on the Federal Reserve after this report. This summer, Fed Chairman Ben Bernanke said the Fed will start "tapering" — or reining in its stimulative monetary policies — if the unemployment rate keeps falling. The Fed plans to meet on Sept. 17-18, and many economists had predicted that the great tapering announcement would be made then.
But the latest report might change that equation. Here's Daniel Gross at The Daily Beast:
Overall the picture painted by the August jobs report is one of a labor market that is still struggling to shift into a higher gear, and one that needs all the help it can get. It’s only one data point, but it certainly makes it more likely that the Federal Reserve will start tapering its bond purchases later rather than sooner. [The Daily Beast]
Furthermore, lawmakers are grappling with a host of problems this month, as they work to come up with a new budget, raise the debt ceiling, and make a decision about Syria — all of which could further drag down the recovery.
The Washington Post's Neil Irwin had this to say:
That such a jobs recovery may not materialize has to make them at least think twice, maybe three times, about pulling the trigger on the so-called taper at this policy committee meeting. Adding to the case for waiting is a looming fiscal standoff and rising oil prices set off by the conflict in Syria, which is heightening geopolitical worries. [The Washington Post]
Once again, the biggest growth in August — 71,000 jobs — came from the retail and hospitality and leisure sectors, typically low-paying industries with a high concentration of part-time jobs.
Two bright spots, however: Factory jobs increased by 14,000, trumping the 5,000 rise economists predicted. And average hourly earnings rose by five cents from July to $24.05, while the average work week rose to 34.5 hours, from 34.4.
Still, as The New York Times' Catherine Rampell points out, "If the economy were to fill the jobs gap left by the recession within the next four years, around 300,000 jobs a month would need to be created, according to the Hamilton Project at the Brookings Institution."