WASHINGTON, 6 September 2003 — US employers unexpectedly slashed 93,000 jobs in August, the government said yesterday, shattering hopes for an end to job seekers’ agony even as a long-awaited economic recovery gathered pace.
Defying Wall Street forecasts of a boost in employment, businesses swung the heaviest jobs ax in five months, the Labor Department said, taking seven months of uninterrupted losses to 595,000 jobs.
The unemployment rate — tracked by a separate Labor Department survey — dipped slightly to 6.1 percent in August from 6.2 percent in July, but that news failed to smother dismay at the state of the labor market.
“It is not a pretty report, there is broad based weakness in jobs,” said BMO Financial Group analyst Sal Guatieri. Despite a pile of bullish economic data in recent weeks, businesses were still cutting jobs, he said. “It is a very perplexing story.”
Industry surveys this month showed manufacturers boosting activity in August at the fastest pace so far this year, and the services industry rattling along at the speediest rate on record.
Yet the employment figures showed manufacturers cut 44,000 jobs in the same month, bringing total losses in the factory sector to 16 percent of the industry’s labor force since July 2000.
In the services side of the economy, retailers trimmed 4,000 jobs, professional and business services lowered jobs by 28,000, and the government sector cut 26,000.
But the construction business took on another 19,000 workers, boosted by a sizzling housing market, still enjoying the fruits of near rock-bottom mortgage rates. And an extra 24,000 people got jobs in education and health.
A power cut that blacked out 50 million people last month likely had little impact on the data, the government said. “By and large, the expenditure numbers and most other survey indicators are suggesting the economy is turning the corner, and yet companies are unwilling to take on new workers,” Guatieri said.
The scarcity of jobs threatens to be a political liability for President George W. Bush, who faces elections in November 2004.
“The economy is growing but the president is not satisfied because there are people who want to work that cannot find a job,” White House spokesman Scott McClellan said.
“Productivity is another reason employment is lagging. Productivity, while it means better paying jobs and better living standards, also means fewer people to do certain jobs.”
The labor and corporate-funded Economic Policy Institute said Bush’s “jobs and growth” tax cut package was failing.