Grim US jobs market confronts Obama, Federal Reserve
By Lucia Mutikani ,Reuters
September 8, 2012, 12:03 am TWN
WASHINGTON -- U.S. jobs growth slowed sharply in August, setting the stage for the Federal Reserve to pump additional money into the sluggish economy next week and dealing a blow to President Barack Obama as he seeks re-election.
Nonfarm payrolls increased only 96,000 last month, the Labor Department said on Friday.
While the unemployment rate dropped to 8.1 percent from 8.3 percent in July, that was because so many Americans gave up the hunt for work. The survey of households from which the jobless rate is derived actually showed a drop in employment.
“This weak employment report, in jobs, wages, hours worked and participation is probably the last piece the Fed needs before launching another round of quantitative easing next week,” said Joseph Trevisani, chief market strategist at Worldwide Markets in Woodcliff Lake, New Jersey.
The lackluster report piled pressure on Obama ahead of the November vote in which the health of the economy looms large.
“This report underscores President Obama's failed promises to get our economy moving again,” House of Representatives Speaker John Boehner, the top Republican in Congress, said in a statement. “Wages are stagnant, gas prices and health care costs are up, our national debt has surpassed US$16 trillion, and millions of Americans remain out of work or underemployed.”
The data dampened spirits in U.S. stock markets, which opened marginally higher. Treasury debt prices rallied and the dollar slipped against the euro to its lowest in nearly four months as traders increased bets the Fed would launch a third round of bond buying at a meeting next Wednesday and Thursday.
Economists polled by Reuters had expected payrolls to rise 125,000 last month, but some had pushed their forecasts higher after upbeat data on Thursday.