The U.S. Labor Department reported Friday that employers cut jobs for a seventh consecutive month in August. Non-farm business payrolls declined by 93,000 last month.
The cut was the steepest in five months, bringing the total job to 431,000. Economists had forecast a gain of 12,000 jobs.
Bank of Montreal called the report “dismal”. It noted that this is largest since a 151,000 drop in March of this year. The decline was broad based, with drops in manufacturing and the service industries. Construction employment was stronger.
As with the Canadian numbers, the blackout doesn’t seem to have hurt employment levels, but it did limit hours worked in the month.
“The continuing decline in employment is clearly a worrisome development from the Fed’s point of view,” said BMO. “However, as long as there are indications that strong productivity growth continues, there should remain sufficient income to sustain the recovery and no pressing reason for the central bank to lower rates further.”
BMO noted that the strong productivity gains should limit inflation pressure.
TD Bank said that the jobless state of the recovery can’t last forever. It is predicting that the U.S. will create 2.5 million jobs in 2004. “Accordingly, while today’s data were disappointing, we believe that the recovery now underway in the U.S. will eventually translate into a meaningful rebound in job creation.”