PAYROLL JOBS CUT IN JANUARY

For the first time since August of 2003, there was a loss in payroll jobs according to the Department of Labor report issued this morning. The unemployment rate fell to 4.9% from 5.0%, a modest improvement, but nearly all other news in the report was negative. For the 19th straight month manufacturers cut jobs, this time 28,000.

From the Bureau of Labor Statistics at bls.gov:

The small January movement in nonfarm payroll employment (-17,000) reflected declines in construction and manufacturing and job growth in health care.

In 2007, payroll employment increased by an average of 95,000 jobs per month. Both construction and manufacturing employment continued to decline in January, and health care employment rose.

Construction employment decreased by 27,000 in January and has fallen by 284,000 since its peak in September 2006. Over-the-month job losses occurred in residential building (-10,000) and residential specialty trade contractors (-18,000).

Manufacturing lost 28,000 jobs in January. Over the month, small declines occurred among many durable and nondurable goods industries. Manufacturing has lost 269,000 jobs over the past 12 months.

In the service-providing sector, health care employment continued to grow in January (27,000), about in line with average monthly gains over the prior 12 months. Within health care, over-the-month job gains occurred in ambulatory health care services (14,000), which includes offices of physicians, and in hospitals (10,000).

From Reuters:

The Labor Department report on Friday came in much weaker than anticipated by analysts surveyed by Reuters, who had forecast 80,000 jobs would be added last month.

"We are on the brink of a recession now," said Daniel North, chief economist for Euler Hermes ACI in Owings Mill, Maryland. "The job market is always a lagging indicator. This is a nail-in-coffin."

The report shocked financial markets.

The U.S. dollar fell sharply against other major currencies. U.S. equity index futures pared their big earlier gains and U.S. government debt prices cut earlier losses.

HORRIBLE EMPLOYMENT REPORT CAUSES CONCERN

The Bureau of Labor Statistics issued its August Employment Situation Report today. It provided plenty of bad news.

From USA Today:

Employers cut 4,000 jobs in August, the first time in four years that monthly hiring contracted, the government said Friday in a report certain to boost pressure on Federal Reserve policymakers to cut interest rates.

In addition to the August job losses, the Labor Department revised down its estimates for hiring in June and July by a total of 81,000. It said 68,000 jobs were added in July rather than 92,000 and 69,000 in June instead of 126,000.

Economists polled a week ago by Reuters had forecast 110,000 jobs would be created in August, but many analysts had scaled back their expectations since then amid increasing signs the job market was coming under strain.

The surprisingly bleak August jobs report was a stark sign that a painful credit crunch that has unnerved Wall Street is putting a strain on the national economy. The last time the economy shed jobs was in August 2003, when 42,000 jobs were cut.

Job losses in August were concentrated in the goods-producing sector. A whopping 46,000 manufacturing jobs were cut, the most since an 86,000-job cut in July 2003. Construction businesses shed another 22,000 jobs, up from 14,000 that were lost in July.

Service industries added 60,000 jobs in August.

Those with jobs, however, did see modest wage gains.

Average hourly earnings rose to $17.50 in August, a 0.3% increase from July. That matched economists' forecasts. Over the past 12 months, wages are up 3.9%. Wage growth supports consumer spending, a major ingredient for a healthy economy.