Employment and unemployment developments, August 2001

Employment and Earnings, Sept, 2001

Employment fell and the unemployment rate rose sharply to 4.9 percent in August. Nonfarm payroll employment declined by 113,000, due primarily to another large drop in manufacturing and a decline in transportation and public utilities. Most other major industries showed little or no change in employment over the month.

Unemployment

The number of unemployed persons increased by more than half a million to nearly 7 million in August. The unemployment rate rose by 0.4 percentage point to 4.9 percent, seasonally adjusted, the highest level since September 1997. The jobless rate had been about 4.5 percent since April; its most recent low was 3.9 percent in October 2000. The rates for most major worker groups were up over the month. (See tables A-3 and A-4.)

The number of persons unemployed less than 5 weeks and the number unemployed 15 weeks or more both increased over the month. (See table A-13.)

Total employment and the labor force

Total employment dropped by about 1 million in August to 134.4 million, seasonally adjusted. This decline followed an increase of about 450,000 in July. Young workers--those ages 16 to 24--accounted for two-thirds of the over-the-month decline in employment. The employment-population ratio fell by one-half percentage point in August to 63.4 percent. This series had hit an all-time high of 64.8 percent in April 2000. (See table A-3.)

The civilian labor force fell by about 400,000 in August to 141.4 million, seasonally adjusted. The labor force participation rate--the proportion of the population 16 years of age and older who are either working or looking for work--declined to 66.6 percent.

Persons not in the labor force

In August, the number of persons not in the labor force who reported that they currently want a job rose to 4.9 million, seasonally adjusted, up from 4.3 million a year earlier. These individuals are not counted as unemployed because they had not searched for work in the 4-week period preceding the survey. Indeed, most had not searched for over a year. (See table A-3.)

About 1.4 million persons (not seasonally adjusted) were marginally attached to the labor force in August, up from 1.1 million a year earlier. These were people who wanted and were available for work and had looked for a job sometime in the prior 12 months but were not counted as unemployed because they had not searched for work in the 4 weeks preceding the survey. In August, the number of discouraged workers was 335,000, up from 205,000 a year earlier. Discouraged workers, a subset of the marginally attached, were not currently looking for work specifically because they believed no jobs were available for them. (See table A-36.)

Industry payroll employment

Nonfarm payroll employment fell by 113,000 in August to 132.3 million, seasonally adjusted. This was the third loss in the past 5 months, resulting in a net decline of 323,000 jobs over the period. (See table B-3.)

In the goods-producing sector, manufacturing employment continued to fall, and August's decline of 141,000 was the largest this year. Since July 2000, employment in the industry has fallen by 1 million. In August, virtually every major manufacturing industry lost jobs. In durable goods manufacturing, industrial machinery and electrical equipment continued to post the largest employment declines, 25,000 and 19,000, respectively. Furniture experienced its largest employment decline this year, shedding 10,000 jobs. Since July of last year, the industry has lost 46,000 jobs. In nondurable goods manufacturing, August declines in apparel, chemicals, and rubber and miscellaneous plastics followed gains in July.

Construction employment was little changed in August. Employment in the industry has shown no net growth in recent months, following a strong first quarter. Employment in mining was unchanged over the month. Within mining, oil and gas extraction has added 22,000 workers thus far in 2001. Coal mining has added 5,000 workers over the past 4 months, the first sustained gains in this industry in over a decade.

In the service-producing sector, employment in the services industry rose by 72,000. Employment in health services continued on its upward trend, adding 32,000 jobs over the month; hospitals accounted for about half of this increase. Employment in social services rose by 33,000 in August after being little changed in July; the average growth over the 2 months was in line with the average monthly gains in the industry over the last year. Employment in help supply services--which provides workers to employers in a wide array of industries--was about unchanged over the month. The industry has been on a downward trend since last September with job losses totaling 419,000. Employment in engineering and management services, an industry where job growth has slowed this year, was little changed in August. The recent downward trend in hotel employment continued in August; job losses have totaled 42,000 since March. Following slower job growth in recent months, computer services experienced its first employment decline since the late 1980s, losing 5,000 jobs.