(RTTNews) - Employment continued to decrease in the month of August, according to a report released by the Department of Labor on Friday, with the continued job losses helping to lift the unemployment rate to its highest level in almost five years.

The report showed that non-farm payroll employment fell by 84,000 jobs in August following a revised decrease of 60,000 jobs in July. Economists had expected a decrease of about 75,000 jobs compared to the decrease of 51,000 jobs originally reported for the previous month.

In addition to the upward revision in job losses for the month of July, the job losses for June were revised up to 100,000 from the previously reported 51,000.

With employment falling for the eighth consecutive month, the unemployment rate unexpectedly jumped to 6.1 percent in August from 5.7 percent in July. The increase came as a surprise to economists, who had expected the unemployment rate to remain unchanged.

The unexpected jump in the unemployment rate lifted it to its highest level since a matching reading in September of 2003. The unemployment rate has not been higher since it reached 6.2 percent in July of 2003.

Chris Low, Chief Economist at FTN Financial Group said that the job loss reported this morning was twice as bad as expected when taking into account the revisions for the previous months.

“Add the jump in the unemployment rate, which is now just two-tenths lower than the peak in the last recession, and a jobs recession at least is undeniable,” Low added.

The continued decrease in jobs reflected job losses in both the goods-producing and service-providing sectors. The goods-producing sector lost 57,000 jobs, while the service-providing sector lost 27,000 jobs.

Continued weakness in employment in the manufacturing sector contributed to the continued loss of jobs in the goods-producing sector, with manufacturing employment falling by 61,000 jobs.

While decreases in jobs in the retail and professional and business services sectors contributed to the loss of jobs in the service-providing sector, the decrease as partly offset by increases in health care and government jobs.

The report also showed that employees’ average hourly earnings increased by $0.07 or 0.4 percent in July to $18.14. The modest increase follows gains of $0.07 in July and $0.05 in June.

The continued weakness in the labor market is likely to raise concerns about the outlook for the broader economy, as consumers are less likely to make discretionary purchases if they are worried about losing their jobs.

Low said, “The loss of real income associated with the weakness in the labor markets has taken a substantial bite out of consumer purchasing power, which has been further reduced by tightening credit.”

“Consumer spending will fall in the third quarter, and there’s a good chance GDP will fall, too,” Low added.

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Posted in Categories: Economy, Forex, Releases, USA.

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