August Employment Report

The news from the August BLS report was not good (but less bad than earlier this year). According to the household survey, the unemployment rate increased from 9.4% to 9.7%. When I saw the headline, I was hoping the rise might be the artifact of increased labor force participation (recall the unemployment rate is measured as a percentage of those working or looking for work, so if improved prospects motivate people to re-enter the labor force, the unempolyment rate can rise), but it was steady at 65.5%. The establishment survey found a decrease in payrolls of 217,000. While rapidly rising productivity is good news in the long run, it implies a larger increase in output would be necessary to generate an increase in employment.

Overall, the picture is consistent with an agonizingly slow turn in the business cycle; if this economy was a car, one would say that it has poor cornering and sluggish acceleration (but good brakes).

For more, see the Times story, and roundups of reactions at Economix and Real Time Economics.