U.S. adds just 96,000 jobs in August as more people give up job hunting
Washington, DC, United States (4E) – The U.S. non-farm sector added 96,000 new jobs in August, widely missing estimates although the unemployment rate fell to 8.1 percent compared to July’s 8.3%, according to a Labor Department report released on Friday. The two-tenths of a percent decline in the unemployment rate, however, was a result of more people leaving the labor force.
Most economists projected 125,000 new non farm jobs for the month, and the unemployment rate to remain steady at 8.3 per cent.
The dip in the unemployment rate is mainly because a huge chunk of the labor force — around 400,000 — was removed in August as the Labor Department only considers people are unemployed if they are actively looking a job. A recent trend of bad economic fortunes has led many people to give up looking for work altogether.
The report also showed that the government made a revision of the total number of jobs created in the months of June and July, which is now lower by 41,000.
This discouraging development indicates extended sluggish activity in hiring, putting pressure on Federal Reserve Chairman Ben Bernanke to act. The Fed is mandated to create good economic conditions that help bring employment to the people. During the Fed’s annual retreat in Jackson Hole, Wyoming last month, Bernanke signalled that he is prepared to take steps to support economic growth if needed.
Given the tone of the Fed Chairman’s speech, the Fed may launch another round of quantitative easing or possibly extend its zero interest rates environment through 2015.