US unemployment exceeds 8% for 43rd month

New York: Payrolls probably grew at a slower pace in August and unemployment exceeded 8 per cent for a 43rd month, highlighting why Ben S. Bernanke said the lack of jobs is a “grave concern” for US policy makers, economists said before a report this week.

The employment tally of 125,000 would follow a 163,000 gain in July, according to the median forecast of 71 economists surveyed by Bloomberg ahead of Labor Department figures September 7. The jobless rate likely held at 8.3 per cent. A separate report may show manufacturing teetered between growing and shrinking.

“Payroll growth is pretty lacklustre,” said Joshua Shapiro, chief US economist at Maria Fiorini Ramirez Inc. in New York. “It’s going to be hard to bring down the unemployment rate quickly. Demand is soggy and on top of that we have weakening exports and fiscal policy uncertainty.”

The stagnant labor market is one reason why more action on the monetary policy front remains an option, Federal Reserve Chairman Bernanke said last week. A cycle of below-average gains in employment and consumer spending is now being reinforced by a global slowdown and concern over the so-called US fiscal cliff, making a rebound more daunting to achieve.

The unemployment rate has exceeded 8 per cent since February 2009, the longest stretch in monthly records going back to 1948.

Payroll gains slowed from an average 226,000 in the first quarter to 73,000 in the April to June period, before picking up in July. Including the July advance, it has taken the US three years to recover about half, or 4 million, of the 8.8 million jobs lost as a result of the 18-month recession that ended in June 2009.

Cutting Staff

Businesses reducing workers include Google Inc., which said it will cut about 4,000 jobs at its Motorola Mobility Holdings Inc. unit. Two-thirds of the reductions will be outside the US, the Mountain View, California-based company said Aug. 13.

Lexmark International Inc., a Lexington, Kentucky-based printer maker, said on Aug. 28 it plans to cut 1,700 jobs globally and shut a factory in the Philippines.

Dollar Tree Inc., the US operator of more than 4,500 discount stores, is attracting bargain-hunting shoppers as joblessness stays elevated, Chief Executive Officer Bob Sasser said.

Customers are “struggling to balance their family budgets in the face of persistently high unemployment and now unpredictable fuel prices,” he said on an Aug. 16 conference call with analysts.

Bernanke’s View

Bernanke, in an August 31 speech to central bankers and economists at an annual forum in Jackson Hole, Wyoming, focused on “the daunting economic challenges” that confront the US He also said the Fed will provide additional policy stimulus as needed to promote a stronger economic recovery.

“The stagnation of the labor market in particular is a grave concern,” he said. It entails “enormous suffering and waste of human talent,” and persistently high unemployment “will wreak structural damage on our economy that could last for many years.”