Unemployment Rate Surges to 6.1 Percent in August

After foreboding omens on Thursday (“Jobs Reports Indicate More People Out of Work,” Sept. 4), the Labor Department confirmed Friday morning that the economy is continuing to shed jobs, sending the unemployment rate over 6 percent for the first time in nearly five years.

The Labor Department said that 84,000 jobs were lost in August. Labor also revised previously-announced jobs losses in June and July higher by 58,000 jobs. Economists were expecting a grim report, with a Bloomberg and MarketWatch consensus of 75,000 lost jobs in August.

Labor raised the unemployment rate to 6.1 percent, a huge jump from the 5.7 percent rate in July. In August 2007, the unemployment rate stood at 4.7 percent; in January of this year, it was 4.9 percent.

The speed at which the unemployment rate has increased alarmed some economists.

“This is the second time in the past four months that the unemployment rate has risen 0.4 percentage points or more in a single month,” wrote David Greenlaw of Morgan Stanley. “Such swings are generally rare. In this case, we suspect that the recent moves at least partially represent a catch-up.”

So far in 2008, the American economy has lost 605,000 jobs.

The August numbers reported by the Labor Department were particularly grim for the private sector. Government added 17,000 jobs in the month, meaning the private sector lost 101,000 jobs.

Michael Gregory, a senior economist at BMO Capital Markets in Toronto, told MarketWatch that in the months ahead, job losses of more than 100,000 will be much more commonplace.

The sectors with the largest job losses in August were Manufacturing (-61,000) – including a loss of 39,000 jobs in the auto and auto parts manufacturing sector – and Employment Services (-53,000).

The sectors with the biggest job gains in the month were Healthcare (+24,000), Government, and Mining (+12,000). The Labor Department noted that over the past 12 months, job growth has been especially strong in support activities for mining (+39,000) and in oil and gas extraction (+17,000).