U.S. Employment, And Global Manufacturing, Stuck At Zero

Because August is a month of vacations for much of the developed world, so it's probably not the most robust indicator of economic health. But this week's reports on industrial production and U.S. employment are approximating zero -- like a pendulum pausing at the end of its swing, or an extreme skateboarder coming out of a jump, before its momentum sends it in the other direction.

Total U.S. nonfarm employment netted out to zero, the worst report in 11 months. There's a big "if" -- the Verizon strike, which removed 45,000 jobs, but even adding those back in it's a poor showing versus the 68,000 new positions economists were expecting, and miles from what the economy needs to keep up with population growth. My MoneyWatch colleague Jill Schlesinger capably reports on the jobs picture, including downward revisions of two prior months.

Private employment actually rose a little, by 17,000, but that was exactly offset by a decrease in government employment, including 15,000 workers in education:

Despite the return of about 22,000 workers from a partial government shutdown in Minnesota, employment in state government changed little in August (+5,000). Employment in local government continued to decline. Since employment peaked in September 2008, local government has lost 550,000 jobs.

Government employment is down 2.5 percent in the past year.

From a global perspective, the manufacturing economy is slowing as well, we learn from J.P. Morgan and Markit. The global PMI is at 50.1, just barely in expansion territory, and heading in the wrong direction:


The output metric dropped to 49.8 from 51.0 for July, and new orders are contracting more rapidly, at 49.4.

The best news for August perhaps comes out of Japan -- sort of. Observers have expected manufacturing to gaining strength after the March earthquake, but the Japan PMI fell to 51.9 for August from 52.1, which still represents growth, but at a slower pace. However new manufacturing orders were their strongest in six months, said to be due to strength in the domestic Japanese economy and in car sales generally.

The Institute for Supply Management reports that the U.S. manufacturing sector is still expanding, with a reading of 50.6 overall. (The Bureau of Labor statistics says manufacturing employment was down 3,000 in August after a series of small gains all year.) The ISM tells us that U.S. firms' new orders contracted slightly (49.6) in August, as did production (48.6).

And yet the ISM holds that the business of making things is growing:

Economic activity in the manufacturing sector expanded in August for the 25th consecutive month, and the overall economy grew for the 27th consecutive month.

That's optimism.

Next week we will hear from President Obama on his latest ideas for job creation. Likely candidates are an infrastructure bank, trade agreements, tax breaks to employers, but as so many have observed, how can employers justify new hires when sales are not increasing? We'll also hear from the gaggle of Republican presidential candidates in a Wednesday night debate. Does anyone have a sensible idea for creating jobs in the short term?