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August jobless numbers show economic strain

The nation has finally caught up to Florida, but in a way nobody likes: U.S. unemployment rose to 6.1 percent in August, duplicating the bad news in the most recent Florida jobless report.

It was a large leap from July's national unemployment rate of 5.7 percent and the highest rate since 2003. Losses in automobile manufacturing and temporary office employment accounted for many of the 84,000 jobs shed.

Analysts suggested larger-than-expected unemployment growth is a late-breaking indicator of how shaky the economy's been.

In Florida, the 2½-year housing downturn has dragged down related industries like banking, construction, title services and home decor. Now it's coming home to roost, and layoffs have been accelerating the past few months.

"When business activity starts to drop, employers don't react immediately by firing people," said Sean Snaith, economics professor at the University of Central Florida. "Conversely, when things start to get better, they don't go out and hire oodles of employees at once."

Nationally, manufacturing employment fell by 61,000 jobs in August. The largest declines were in motor vehicles and parts, industries that lost 39,000 jobs in August and 128,000 jobs over the past year.

About 27,000 office temp jobs vanished in August. So did 14,000 construction jobs, though losses in that field were less severe than the average of 45,000 jobs that disappeared each month in the first half of 2008.

"With the unemployment rate over 6 percent, it is a clear warning sign that this economy is continuing to soften faster than we thought," said Joel Naroff, president of Naroff Economic Advisors. "Businesses have decided to hunker down. They are not hiring, and they are paring workers where they can."

Nevertheless, hiring has been relatively brisk at hospitals and in the oil fields. Mining, a category that includes gas and petroleum drilling, boosted employment by 12,000 in August. The health care industry added 27,000 jobs last month.

Unemployment in the Tampa Bay area was 6.6 percent in July, up from 5.9 percent in June. The state releases August jobless numbers on Sept. 19. Contrary to our jobs engine reputation, Florida unemployment should hover higher than the national average for a while.

Florida has lost close to 100,000 jobs the past year, 79,200 of those in construction. A state economic forecast in July didn't see a turnaround this year.

"They really don't expect much improvement until mid to late 2009. The housing correction takes time to work its way through the economy,'' said Rebecca Rust, the economist who keeps labor statistics for the state Agency for Workforce Innovation.

Snaith predicted the economy has to pass through what he calls the Bermuda Triangle in the last three months of 2008 and first three months of 2009. Will the Federal Reserve lower interest rates or hold them steady? How prolonged will the credit crunch be? Will housing turn the corner? If we clear that turbulence, he expects a recovery later in 2009.

'"I'm not sure how high nationally the unemployment rate would get. I'd be surprised if it got to 7 percent, but 6½ percent is probably likely,'' he said.

August jobless numbers show economic strain 09/05/08 [Last modified: Monday, September 8, 2008 11:34am]
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