Employers sliced payrolls by 4,000 in August, the first drop in four years, a stark sign that a painful credit crunch that has unnerved Wall Street is putting a strain on the national economy. The latest snapshot of the employment climate, released by the Labor Department on Friday, also showed that the unemployment rate held steady at 4.6 percent, mainly because hundreds of thousands of people left the work force for any number of reasons. Job losses in construction, manufacturing, transportation and government swamped gains in education and health care, leisure and hospitality, and retail. Employment in financial services was flat. The weakness in payrolls reflected fallout from a deepening housing slump, a credit crisis and financial turbulence that has made businesses more cautious in their hiring.Calculated Risk has some good discussion about the employment numbers this morning, and you can click here to see the formal press release and data from the BLS. I'd posted on the recent job losses in the mortgage banking sector recently, noting in late August that job losses surpassed 38,000 at that point. The number has continued to soar since that post, and as a result, today's report suggests these losses are starting to have a broader impact -- it also would appear to be the start of more downward pressure on the BLS jobs data going forward.
Jobs Head Downward as Mortgage Crunch Affects Payrolls
Not surprisingly for readers of this blog, the Labor Department said today that employers cut jobs in August, the first downward trend in jobs in over four years. The mortgage crisis and resulting credit crunch affecting financial markets was cited as a chief culprit, according to most media reports I've read this morning. The Associated Press reports: