US jobs figure weaker than expected

8 Sep 2012, 12:03 am   -   Source: AAP

The US economy created a lower than expected 96,000 jobs in August, official figures show, while the jobless rate fell to 8.1per cent.

US employers added 96,000 jobs last month, a weak figure that could slow the momentum President Barack Obama hoped to gain from his speech to the Democratic National Convention.

The unemployment rate fell to 8.1 per cent from 8.3 per cent in July. But that was only because more people gave up looking for jobs. People who are out of work are counted as unemployed only if they're looking for a job.

The government also said that 41,000 fewer jobs were created in July and June than first estimated. The economy has added just 139,000 jobs a month since the start of the year, below 2011's average of 153,000.

Cash-short governments were a key reason the job market was weaker in June and July than first estimated. Federal, state and local governments cut 39,000 jobs in those months - above the earlier estimate of 18,000. In previous recoveries, governments have typically added jobs, not shed them.

Friday's report was discouraging throughout. Hourly pay fell, manufacturers cut the most jobs in two years and the number of people in the work force dropped to its lowest level in 31 years.

The sluggish figures make the Federal Reserve more likely to unveil a new bond-buying program at its meeting next week to try to lift the economy, said John Silvia, chief economist at Wells Fargo.

"This weak jobs report is going to feed into their argument that the economy is growing at a sub-par pace," Silvia said.

The report provided fodder for both presidential candidates. Soon after the report was issued, Republican nominee Mitt Romney pointed to 43 straight months in which unemployment has now exceeded 8 per cent.

"President Obama just hasn't lived up to his promises, and his policies haven't worked," Romney said in a statement.

At the same time, August marked the 30th straight month of private-sector job gains, a point Obama and his allies are certain to spotlight.

Friday's jobs report is among the most politically consequential of the campaign. It arrives as the US presidential race enters the final two months before Election Day. Jobs are the core issue, and the report could sway some undecided voters.

There will be two additional employment reports before the election. But by then, more Americans will have made up their minds.

In his speech on Thursday night, Obama acknowledged incomplete progress in repairing the still-struggling economy and asked voters to remain patient.

"The truth is, it will take more than a few years for us to solve challenges that have built up over the decades," Obama said.

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