Forecast of modest US job gains may not lift Obama
Friday, September 7, 2012
WASHINGTON (AP) — U.S. employers likely added jobs last month, though probably not enough to push down the unemployment rate. A tepid report Friday on hiring in August would provide little momentum to President Barack Obama's campaign a day after his speech to the Democratic convention.
Analysts forecast that the economy generated 135,000 jobs last month and the unemployment rate remained 8.3 percent, according to a survey by FactSet. That's below the 163,000 jobs gained in July, but an improvement from meager hiring in the spring.
In his speech Thursday night, Obama acknowledged incomplete progress in repairing the still-struggling economy and asked voters to remain patient.
But economists were encouraged Thursday after several reports suggested hiring could pick up in the coming months.
Fewer people applied for unemployment benefits last week, the government said. And companies boosted hiring in August, according to a private survey. A third report showed that service sector companies, such as hotels, retailers, and financial services firms, expanded at a faster rate last month.
The stock market jumped, mostly in response to an announcement by the European Central Bank that it will buy more government bonds in an effort to ease the region's financial crisis. The Dow Jones industrial average soared 245 points to its highest level since December 2007.
Friday's unemployment and hiring figures will be among the most politically consequential of the campaign. They arrive just as the presidential race enters its final stretch. Jobs are the core issue, and the report could sway some undecided voters.
There will be two additional employment reports before Election Day Nov. 6. But by then, more Americans will have made up their minds.
"It's the most important economic data point we have between now and Election Day," said Tony Fratto, a White House spokesman under President George W. Bush.
Despite its political significance, Friday's jobs data is unlikely to signal major improvement in the still-sluggish economy.
But it will likely provide both sides with fodder for their campaigns. Republican nominee Mitt Romney has pointed to 42 straight months in which unemployment has exceeded 8 percent.
At the same time, Friday's report will almost surely mark a 30th straight month of private-sector job gains, a point Obama and his allies are certain to spotlight.
"The president's supporters will say, 'See, it's improving,' and the supporters of Gov. Romney will say, 'See, it's not improving fast enough,'" said Robert Shapiro, an economist and former trade official under President Bill Clinton.
The biggest threat to Obama would be a rise in the unemployment rate, the most visible economic statistic for most voters. The rate is the same now as it was in January.
For the White House, a higher rate could offset any political benefit from slow but consistent job creation. Voters are likely to ask, "If you're creating jobs every month, why is the rate going in the wrong way?" Fratto said.
A drop in unemployment, meanwhile, would help Obama focus on social issues that might play better with the independent voters he needs in battleground states. Polls show Obama has an edge on Romney on social issues, while Romney has a slight advantage on the economy.
"It makes it easier for the president to continue attacks on women's health care, immigration and every other differentiation with Republicans," said Hank Sheinkopf, a Democratic strategist.
Thursday's government data on the job market exceeded economists' expectations. Weekly applications for unemployment benefits fell 12,000 last week to a seasonally adjusted 365,000. And ADP, a payroll provider, estimated that companies added 201,000 jobs last month, the most since March.
A third report found that service sector companies expanded at a faster pace last month. The Institute for Supply Management, a trade group of purchasing managers, said its services index rose to 53.7 from 52.6 in July. Any reading above 50 indicates expansion. Service businesses such as stores, hotels and financial companies reported sharp hiring gains.
Still, the ISM's report hasn't always closely matched the government's more authoritative employment report. And the ADP survey covers only private-sector hiring.
At least 200,000 jobs a month are needed to lower the unemployment rate. The economy has averaged only 150,000 new jobs a month since the start of 2011.
"Clearly, this is not an economy on track to the fast lane," said Chris Jones, an economist at TD Bank.
A weak employment report could nudge the Federal Reserve to announce some new action to boost growth after its meeting next week.
Associated Press writer Josh Lederman contributed to this report.
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