Clearly, this morning's report about the job market was not good. Net job creation was zero, the weakest since September 2010; private sector job creation was the weakest since early 2010. Of particular concern was the widespread decline in aggregate hours worked across many industries in the private sector. Thus, even though the number was distorted by the strike by 45,000 Verizon workers, there was weakness throughout the economy. Aggregate hours worked declined significantly during the month and is on track for a decline of about 0.4% for the third quarter (annualized rate), the first quarterly decline since late 2009. Another concern for the future of the job market is the decline in productivity thus far in 2011, which suggests that companies face no pressure to add workers to meet current demand (i.e., rapid increases in productivity would suggest that workers are being stretched to meet demand; declining productivity implies workers aren't being pressed to produce at an optimal rate and thus new workers are not needed). Another concern is that the number of people working part time for economic reasons surged by over 400,000, resulting in an increase in the U6 measure of unemployment to 16.2%.
How about some good news? The private sector added 17,000 jobs. If you add the 45,000 striking Verizon workers, that increases to 62,000, indicating weak growth as opposed to outright decline. At best, it suggests that the job market will continue to struggle into 2012, with unemployment remaining at historically high levels. In fact, the OMB forecasts that the unemployment rate will average 9% in 2012.
