Hiring Stalls In August

9/12/2011


After 10 consecutive months of higher nonfarm payrolls, the first such streak since 2007, the economy added no net jobs in August. A strike at Verizon Communications ($35; VZ) weighed on the numbers, but Wall Street expected 80,000 new jobs in August, and the news is bad no matter how you look at it.

During the 10 months ended July, the U.S. economy added nearly 1.3 million jobs. But from the end of 2007 to the low point in February 2010, U.S. nonfarm payrolls shrunk by 6.3%, or 8.7 million jobs, so the economy still has a ways to go to gain back the lost ground.

U.S. PAYROLL CHANGE
Month
Job Chg.
(Thous.)
 
Month
Job Chg.
(Thous.)
Aug. 11
0
   
Aug. 10
(59)
Jul. 11
85
   
Jul. 10
(49)
Jun. 11
20
   
Jun. 10
(192)
May-11
53
   
May-11
458
Apr. 11
217
   
Apr. 10
277
Mar. 11
194
   
Mar. 10
192
Feb. 11
235
   
Feb. 10
(35)
Jan. 11
68
   
Jan. 10
(39)
Dec. 10
152
   
Dec. 09
(130)
Nov. 10
93
   
Nov. 09
(55)
Oct. 10
171
   
Oct. 09
(221)
Sep. 10
(29)
   
Sep. 09
(236)
Source: Bureau of Labor Statistics.

One month does not a trend make, and private-sector payrolls did increase by 17,000 in August, so it's too early to call an end to the payroll expansion we've seen since last fall. However, the August slowdown reflects not only continued cuts in government jobs, but also a decline in U.S. businesses' confidence.

Just as worrisome is the fallout effect on individuals. U.S. consumer spending rose more than expected in July, and the expansion of payrolls provided reason to believe that growth would continue. However, the Conference Board Consumer Confidence Index fell 25% in August, hitting its lowest level since April 2009.

The Blue Chip August consensus projected 2.1% growth in consumer spending for the year. How much the August hiring slowdown affected spending remains to be seen.


Current Hotline

Stock Spotlight

Individual Stock Reports

ISRs make stock research easy!

Perhaps the most valuable two page reports available anywhere.

All the data you would normally have to plow through years of 10-K filings, earnings reports, and reams of market data to assemble — yours all in one concise report.

ISRs contain our proprietary Quadrix scores — find out how we rate all the stocks in the S&P 500.

Visit us at individualstockreports.com