No new jobs added in August as unemployment rate holds at 9.1%

The latest snapshot of the labor market provided stark evidence that hiring has stalled and that the feeble economic recovery remains threatened by the unusually deep and prolonged challenges facing American workers.

Friday’s report from the Labor Department intensifies the pressure on President Obama to propose a robust jobs plan when he addresses the nation next week, and could also push the Federal Reserve to take further action on interest-rate and other monetary policies when it meets later this month.

The nation’s unemployment rate in August stayed at 9.1%, as more people reported that they found part-time work, many of them because that’s all that was available.

About 14 million people were officially unemployed last month. About 6 million of them, or nearly 43% of the unemployed, have been without work for six months or longer. Short term, many of them face the loss of extended jobless benefits. Longer term, they face increasing risks of losing skills and hopes of getting re-employed.

The report had discouraging news for current workers as well. The government said private employers in August trimmed by a notch the average work hours of all employees, to 34.2 hours. The average hourly earnings for workers, meanwhile, dropped 3 cents to $23.09 last month.

In August, total nonfarm payroll employment stood at 131.1 million. That was the same number as July, marking the weakest change since last September, when employers shaved a net 29,000 jobs.

The latest tally was affected by the strike of about 45,000Verizon workers during the week when the Labor Department surveys employers. That will give a lift to September’s jobs count, as those striking workers have returned to their jobs.

Hiring in August also may have been held back by the political turmoil over lifting the debt ceiling, the downgrading of U.S. debt, and those events’ damaging effect on Wall Street and public confidence. Stocks were down sharply Friday after the jobs release, with the Dow Jones industrial average off about 200 points by mid-morning.

“The heightened market volatility has led businesses to question the durability of the recovery,” said Doug Duncan, chief economist at the housing finance agency Fannie Mae. “More firms will likely stay on the fence with regard to future hiring, increasing the chances of outright job losses in coming months, and putting the odds of a recession in the coming year at a coin toss.”

Even accounting for the large-scale Verizon strike, many economists were expecting job growth of around 70,000 for August. But the report showed a stall in hiring last month in industries almost across the board, with the exception of healthcare services, which added 35,500 jobs.

Government cut back a net 17,000 jobs last month, most of them teaching and other positions at local schools. Manufacturing, which added 36,000 jobs in July thanks largely to a rebound at car plants, shed 3,000 jobs last month. The temporary-help industry, often seen as a harbinger of broader hiring, added just 4,700 jobs in August, continuing a pattern of little or no growth in recent months.

“The stagnation in U.S. payroll employment is an ominous sign,” said Paul Ashworth, an economist at Capital Economics. “The broad message is that even if the U.S. economy doesn’t start to contract again, any expansion is going to be very, very modest and fall well short of what would be needed to drive the still-elevated unemployment rate lower.”

Making matters worse, the government on Friday revised down job growth figures for July, to 85,000 from 117,000 previously reported, and said employers added just 20,000 jobs in June, not 46,000.

In all, the economy has added an average of just 35,000 jobs a month in the last three months – a figure so small that most analysts would consider it a rounding error. That is a dramatic slowdown from the nearly 180,000 net new jobs added monthly, on average, in the first four months of this year when it looked like the nation’s hard-hit job market might finally be recovering.

“Though much attention is being paid to ‘zero job growth’ in August, the real news in today’s numbers is that job growth is worse than in recent months, and the nation continues to produce far fewer jobs than needed to meaningfully reduce the unemployment rate,” said Heidi Shierholz, an economist at the Economic Policy Institute. “In fact, in some ways the report was less than zero in that weekly hours fell, as did hourly earnings.”