US August employment shows weakening economy

The economic data last week on the whole show that the United States economy is probably continuing to grow but at a weakening pace.

July data released by the Commerce Department were quite positive. Real consumer spending rose 0.5 percent in July while factory orders jumped 2.4 percent.

Data for August were less positive.

The Conference Board's consumer confidence index fell to 44.5 in August from 59.2 in July.

The Institute for Supply Management's manufacturing PMI in August was 50.6, staying in expansion territory but declining from 50.9 in July. The new orders index edged up to 49.6 in August from 49.2 in July but remained below 50 for the second consecutive month.

The week ended with the Labor Department reporting that total nonfarm payroll employment was unchanged at 131.1 million in August. The unemployment rate was also unchanged at 9.1 percent.

Zero growth in employment looks bad but the weakness was exaggerated by 45,000 workers at Verizon Communications going on strike, which pulled down the total employment. These workers began returning to work on 22 August and will boost September's employment number.

The monthly changes in employment can be somewhat volatile so even a reading of zero growth in one month may not necessarily indicate a recession. The ISM's manufacturing employment index for August was at 51.8, indicating that factory employment continued to expand. The index, though, was significantly down from 53.5 in July.

The employment numbers are probably not yet indicative of a recession. But they got a bit closer in August.