National jobless rate hits 26-year high

The unemployment rate jumped almost a half-point, to 9.7 percent, in August, the highest since 1983, reflecting a poor
job market that will make it hard for the economy to begin a sustained recovery.

While the jobless rate rose more
than expected, the economy shed a net total of 216,000 jobs, less than July’s revised 276,000 and the fewest monthly losses
in a year, according to Labor Department data released today. Economists expected the unemployment rate to rise to 9.5 percent
from July’s 9.4 percent and job reductions to total 225,000.

"It’s good to see the rate of job losses slow
down," said Nigel Gault, chief U.S. economist at IHS Global Insight. But "we’re still on track here to hit 10 percent
(unemployment) before we’re done."

The rise in the jobless rate was partly due to 73,000 people joining the
civilian labor force and the government finding that the number of unemployed Americans jumped by nearly 500,000, to 14.9
million. Those figures are from a different survey than the report on total job cuts.

The civilian labor force
usually grows as a recession winds down and optimism about finding work grows. But as long as Americans remain anxious about
their jobs, consumer spending isn’t expected to rise enough to power a rebound.

"There isn’t the underlying
fuel there for strong consumer spending growth," Gault said.

Analysts expect businesses will be reluctant
to hire until they are convinced the economy is on a firm path to recovery. Many private economists, and the Federal Reserve,
expect the unemployment rate to top 10 percent by the end of this year.

If laid-off workers who have settled for
part-time work or have given up looking for new jobs are included, the so-called underemployment rate reached 16.8 percent,
the highest on records dating from 1994. That rate rose because the number of workers settling for part-time hours, either
because their employer cut their work week or because that’s all they could find, increased by about 300,000.

But
earnings rose and the number of hours worked stayed above a recent record-low. Average hourly wages increased to $18.65, from
$18.59, the department reported. Average weekly earnings increased to $617.32.

The number of weekly hours worked
remained at 33.1, above the low of 33 reached in June. That figure is important because economists expect companies will add
more hours for current workers before they hire new ones.

The recession has eliminated a net total of 6.9 million
jobs since it began in December 2007. Job cuts last month remained widespread across many sectors. The construction industry
lost 65,00 jobs. Factories cut 63,000, while retailers pared 9,600 positions. The financial sector eliminated 28,000 jobs,
while professional and business services dropped 22,000. Even the government lost 18,000 jobs, as the U.S. Postal Service
cut 8,500 positions.

Health care and educational services was the only bright spot, adding 52,000 jobs. And the
pace of layoffs is slowing. Job losses averaged 691,000 in the first quarter and fell to an average of 428,000 in the April-June
period.

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