U.S. Gained 96,000 Jobs in August; Jobless Rate Falls to 8.1 Percent

The unemployment rate fell to 8.1 percent largely because more people gave up looking for work, the Labor Department said Friday

By CHRISTOPHER S. RUGABER
|  Friday, Sep 7, 2012  |  Updated 2:51 PM CDT
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U.S. Made Meager Job Gains in August

AP

Weak jobs numbers out Friday could complicate President Barack Obama's reelection bid.

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

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

The government also said Friday 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.

Dow Jones industrial futures, which had been up before the report, fell soon after it was released but then bounced back. And the yield on the benchmark 10-year Treasury note tumbled to 1.63 percent, from 1.73 percent. That suggested that investors still see a slow economy, resulting in more demand for low-risk investments like U.S. Treasurys.

The 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.

Sluggish hiring could nudge the Federal Reserve to announce some new action to boost growth after it holds a policy meeting next week.

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The report on hiring and unemployment is among the most politically consequential of the campaign. The figures arrive just as the presidential race enters the final two months before Election Day. Jobs are the core issue, and the report could sway some undecided voters.

Republicans immediately slammed the report as fresh evidence of Obama's failures.

"If last night was the party, this morning is the hangover," Mitt Romney said. "After 43 straight months of unemployment above 8%, it is clear that President Obama just hasn't lived up to his promises and his policies haven't worked. We aren't better off than they were four years ago."

House GOP leader Rep. Eric Cantor said "we haven't seen results" and hammered his party's preferred prescription of "keeping taxes low and cutting red tape."

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

In his speech 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.

In addition to those who've given up looking for work, many young Americans are avoiding the job market by remaining in school. All told, the proportion of the population that is either working or looking for work fell to 63.5 percent. That's the lowest level in 31 years for the labor force participation rate.

Average hourly wages dipped a penny to $23.52 and are only slightly ahead of inflation in the past year.

The average work week was unchanged in August after being revised downward in July to 34.4 hours. And the number of temporary jobs fell for the first time in five months. Both figures suggest that companies are seeing less demand for their services and need fewer workers.

Many of the jobs were in lower-paying industries such as retail, which added 6,100 jobs, and hotels, restaurants and other leisure industries, which gained 34,000. Higher-paying manufacturing jobs fell by 15,000, the most in two years.

The weak pace of hiring is the latest sign that businesses are reluctant to make big investments or add more workers. Europe's financial crisis has pushed the region's economy to the edge of recession. And a set of tax hikes and spending cuts scheduled to take effect at the beginning of the year have created uncertainty about future growth.

No president since Franklin D. Roosevelt during the Great Depression has been re-elected with a jobless rate over 8 percent. This year's election will likely turn on whether voters see the economy as improving or remaining stagnant or getting worse under Obama.

Friday's numbers gave both Obama and Romney campaigns something they could point to in making their rival cases. Supporters of the president could hail the drop to 8.1 percent, suggesting it shows the economy is on the mend, if slowly. Republicans are sure to focus on the raw job losses.

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