Washington,
DC, Sept. 7—The nation's unemployment rate rose to 4.9% in August, the highest
level in nearly four years, and businesses cut 113,000 jobs. The Labor
Department reported that the rate jumped from 4.5%, the level it had held since
April.
Manufacturing was once again hardest hit, and the August decline of 141,000 jobs
was the largest so far this year. Virtually every major manufacturing industry
lost jobs last month. Since July 2000, manufacturing employers have cut a
million jobs.
Businesses eliminated 113,000 jobs in August after adding a revised 13,000
positions in July. The 4.9% unemployment rate is the highest since September
1997.
While the August jobless rate is still low by historical standards, it shows a
sharp deterioration from the three decade low of 3.9% hit in several months last
year.
Just this week, Motorola Inc. announced it would cut 2,000 more jobs. Insurance
giant American International Group said it’s cutting 1,500 jobs, and as
Hewlett-Packard and Compaq merge, the companies say they will be cutting 15,000
jobs.
Economists worry that if the employment climate continues to seriously
deteriorate, consumers—who have been keeping the economy afloat—might cut
back spending dramatically and push the country into recession.
Recession fears were renewed last week when the government revised its estimate
of economic growth in the second quarter to only 0.2%. By one traditional
measure, a recession occurs when the GDP is negative for two consecutive
quarters.
The biggest declines in manufacturing last month were in durable goods, with a
25,000 decline, and industrial machinery and electrical equipment, with a 19,000
drop. Furniture had its largest decline this year, dropping 10,000 jobs. In non
durable goods manufacturing, decreases in apparel, chemicals and rubber and
miscellaneous plastics followed gains in July.
Manufacturing's troubles continued to affect employment in transportation and
public utilities, which fell in August by 24,000—the fourth drop in the past
five months and the largest in that period.
The service sector, which is the engine of job creation in the U.S., increased
employment by 72,000 as health services continued to add jobs with 32,000 last
month. Hospitals accounted for about half of that increase.
Employment in temporary help firms was steady for the month. The industry has
shed 419,000 jobs since last September.
Retail employment was down in August as restaurants and bars lost 30,000 jobs
following a large increase in July. Hotel employment also continued to fall,
with job losses totalling 42,000 since March.
Computer services experienced its first drop in jobs since the late 1980s,
losing 5,000 jobs. One of the reasons the Fed has cited for cutting interest
rates is its concern about slumping investment by businesses in computers and
other high tech equipment, which was the fuel of the economic boom.
Construction employment was steady in August, adding 5,000 jobs. Mining, oil and
gas extraction companies have added 22,000 workers so far this year. Coal mining
has added 5,000 workers in the past four months, the first gains in the industry
in more than a decade.
Copyright
2001 Floor Focus Inc
