The financial markets end the week on mildly optimistic news with the unemployment rate edging down to 8.1% and the nation adding 96,000 jobs in August, the Labor Department said Friday.
The falling unemployment rate follows two cautiously optimistic employment reports from Challenger, Gray & Christmas, which reported fewer planned layoffs in August; and from ADP, which reported private sector job gains.
But like earlier forecasts, many of the August job gains occurred in the food services and hospitality industries.
Capital Economics called the jobs gain lackluster. “The modest 96,000 increase in US non-farm payrolls in August only increases the probability that the Fed will launch QE3 next week and it isn’t going to help President Obama’s re-election chances either,” said chief U.S. economist Paul Ashworth.
Tim Rood, Partner and Managing Director of The Collingwood Group said the numbers, while disappointing, are not a surprise. The weak economic recovery means that the demand to create new jobs will remain depressed.
“Housing is pulling itself off the mat, but can’t shoulder the weight of the entire jobs market recovery that is plagued by weak consumer confidence and tattered household financials, and the challenges of our major trading partners overseas,” he said.
The National Employment Law Project released a report earlier this week, warning that low-wage job growth in areas such as food services can be a harbinger of an economy that is shedding higher waged positions for low growth jobs if gains are not made in other areas.
However, the Labor Department did note some gains in professional, health care and technical services hiring across the nation Friday.
The total number of unemployed Americans remained stagnant at 12.5 million.