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Weak data point to US jobs doldrums in August

04 september 2011, 16:46
The recent batch of US economic indicators is pointing to further weakness in the ailing labor market ahead of Friday's keenly anticipated monthly jobs data, AFP reports.

With nearly 14 million workers without jobs and the economy sputtering, the Labor Department's report on August nonfarm payrolls numbers and the unemployment rate is expected to provide another dose of glum news.

The report comes amid political gridlock in Washington, as President Barack Obama's Democrats and their Republican foes battle over how to achieve long-term deficit reduction.

It also comes ahead of Obama's speech to a joint session of Congress next Thursday, in which he will lay out a plan to create jobs and stimulate the economy, which grew less than one percent in the first half of the year.

Jobs growth has been well below the approximately 250,000 new monthly payrolls some economists say the world's largest economy needs to add for some time to make a dent in high unemployment.

"Once again, it appears there will be disappointing job gains, though that is hardly a surprise," said Joel Naroff of Naroff Economic Advisors.

"With the debt ceiling debate debacle, the S&P downgrade debacle, the equity market roller-coaster ride and Mr. Bernanke’s warning that growth is likely to be subpar for as long as the eye can see, the real surprise is that business executives actually had the guts to hire anyone in August," he added.

Most analysts expect the Labor Department will report a net nonfarm 70,000 jobs were added in August, according to the average estimate, down from 117,000 in July.

That would be well below the 100,000 seen as necessary to support a steady unemployment rate, according to Briefing.com economists.

The private sector, which has been the main engine for jobs growth as revenue-strapped governments shed workers, also was projected to limp ahead, creating only 110,000 jobs compared to 154,000 the previous month.

The unemployment rate was expected to remain stuck at 9.1 percent for the second straight month.

The pace of layoffs slowed in August, but that was compared to a 16-month high in July, according to outplacement firm Challenger, Gray & Christmas.

Goldman Sachs analyst Jari Stehn pointed out that the August payroll number on Friday was expected to be lowered by a two-week strike against Verizon Communications by about 45,000 employees.

"Despite weak employment creation we expect a steady 9.1 percent unemployment rate because of weak labor force growth," Stehn said.

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