New reports show that the number of layoffs and new unemployment claims rose again in August, at a rate exceeding earlier projections for the month. These unexpected declines indicate that, unlike many other segments of the economy, the job market is far from stabilizing. Some analysts forecast a jobless recovery in which financial conditions, such as credit access and consistent profitability, begin to turn around without creating significant numbers of new jobs.

According to the newest monthly data from the Department of Labor, the unemployment rate in the United States rose to 9.7 percent in August, with 216,000 additional non-farm job losses that month, bringing the total number of unemployed to 14.9 million. The declines, announced last week, represented an increase in the unemployment rate of 0.3 percent, though the rate had remained relatively unchanged in June and July, after rising by 0.4 percent to 0.5 percent each month between December 2008 and May 2009.

Manufacturing employment lost 63,000 jobs, including 15,000 in the motor vehicles and parts industry, which undercuts the 31,000 jobs gained in the industry in July. Construction employment fell by 65,000 jobs, bringing the total number of unemployed in the sector to 1.4 million, while mining shed 9,000 jobs.

For the week ended August 29, the number of non-adjusted initial unemployment claims for state programs came to 452,271, which was 5,002 claims lower than the previous week but significantly higher than the 358,730 claims filed the same time last year, according to the latest weekly data from the Labor Department.

However, many reports note that despite the unexpected leap in August, the rate of unemployment continues to slow, with relatively fewer jobs being shed each month.

According to the ADP National Employment Report, the services sector dropped 146,000 jobs in August while the goods-producing sector lost 152,000: large businesses (500 or more employees) shed 60,000 jobs; medium-sized businesses (50 to 499 employees) dropped 116,000 jobs; and small businesses (fewer than 50 employees) declined by 122,000 jobs.

Despite these losses, the August employment decline was the smallest since September 2008.

"Employment losses are clearly diminishing. Despite recent indications that overall economic activity is stabilizing, employment, which usually trails overall economic activity, is still likely to decline for at least several more months, albeit at a diminishing rate," ADP notes.

Likewise, not all estimates are negative. Meanwhile, Monster.com's Monster Employment Index, which measures online job recruitment activity in the U.S., rose 6 percent last month — the highest rate of increase since August 2005 and the slowest rate of contraction since December 2008.

"The significant jump in the Monster Employment Index in August offers encouraging signs of improvement in the U.S. economy with the demand for managers and professionals as well as sales and office workers picking up in time for the fall hiring season," Jesse Harriot, senior vice president at Monster Worldwide, said in an announcement of the findings.

Considering the overall unemployment rate, the job market within the manufacturing industry may also be performing better than expected. Although the rate of recruitment will remain well below 2008 levels, according to new findings from the Society for Human Resource Management (SHRM), hiring for September 2009 is expected to surpass layoffs for the third consecutive month, meaning that more manufacturing employers intend to add jobs than reduce them.

"Though hiring is down in September compared with a year ago, manufacturers and service companies are planning the highest combined level of hiring since October 2008," the latest monthly SHRM report claims.

Another important indicator of employment conditions is consumer perception of the job market. A joint survey from Reuters/University of Michigan recorded less than half the number of newly reported job losses in August as there were six months ago. Furthermore, although consumers expect the unemployment rate to rise to slightly above 10 percent before turning around, the majority believe that unemployment has neared its cyclical peak.

Despite the optimistic signs, unemployment is still a major source of concern. The August job loss numbers have shown that we may have to wait a while longer for a true turnaround in the job market.

"In a normal recession, people would now start to feel more comfortable and start hiring, but nobody is doing that today. They'll do it when they see real orders and real business," Jonas Prising, executive vice president at employment services firm Manpower, told the Washington Post.

While hiring is expected to lag initially, new hiring will eventually pick back up. Naturally, this is expected to occur sooner in some sectors than in others.

The results of the latest Manpower Employment Outlook Survey, released yesterday, show employers in mining, information, finance and other services expect hiring to remain relatively stable in the fourth quarter of this year compared to the third quarter.

Meanwhile, employers in durable and non-durable goods manufacturing, wholesale and retail trade and government sectors anticipate a slight decrease in hiring levels. Those in the construction sectors indicate considerably weaker hiring plans when compared to Q3 2009.

"Despite some moderating signs, such as the considerable number of employers that plan to maintain or increase staff levels, there will continue to be challenges for both job seekers and employers in the coming months," according to Prising.

Resources

The Employment Situation — August 2009
U.S. Department of Labor, Sept. 4, 2009

Unemployment Insurance Weekly Claims Report
U.S. Department of Labor, Sept. 3, 2009

ADP National Employment Report
ADP, Sept. 2, 2009

Monster Employment Index Rises Sharply in August
Monster.com, Sept. 3, 2009

LINE: Hiring in Manufacturing and Services Will Continue to Make Strides in September
Society for Human Resource Management, September 2009

Surveys of Consumers: Economy Set to Improve, but Finances Expected to Remain Weak
Reuters/University of Michigan, August 2009

Economic Growth Yet to Hit Job Market
by Neil Irwin
The Washington Post, Sept. 5, 2009

Manpower Employment Outlook Survey: Q4 United States
Manpower Inc., Sept. 8, 2009

Manpower Employment Outlook Survey Projects a Weak Hiring Pace for Q4 2009
Manpower Inc., Sept. 8, 2009