06 Sep 2013
112 CommentsThe unemployment rate edged down from 7.4pc in July to 7.3pc in August – its lowest rate since 2008 - but the change was driven by people dropping out of the labour force rather than any increase in paid employment.
According to Labour Department figures released on Friday, the number of people with jobs fell by 112,000 in August. The data do not go into detail about why specific industries suffered, but it is thought that a temporary hiatus in the pornography industry had a significant impact on the figures.
The adult film business was brought to a standstill for 12 days in August, after one of its actors was found to have HIV. The jobs data do not drill down into such specific industries, but the wider movie business lost 22,000 paid jobs – around 6pc of its total workforce.
However, America’s official unemployment rate still fell as 312,000 people are no longer counted as part of the country’s potential workforce, for example because they passed retirement age, or entered full time education.
The Labour Department also revised its June and July hiring figures sharply downwards, revealing that 74,000 fewer people entered paid employment over the summer than it had previously thought.
Wall Street has been prepared for the US Federal Reserve to start winding down its $85bn-a-month bond buying programme in the coming weeks, but investors recalibrated their expectations after the weak jobs data.
US Federal Reserve chairman Ben Bernanke has said it will begin winding back QE if America’s economic recovery continued as strongly as expected, and is especially likely to take action once the US unemployment rate falls to 7pc.
Most economists had expected the tapering to begin this month or next, but many said they are now working on the assumption that quantitative easing – effectively printing money by buying bonds - will carry on at its current level until the end of the year.
Doug Handler, chief US economist at HIS Global Insight, predicted that the Fed will start slowing the bond buying programme in December.
“An analysis of the unemployment rate alone adds credence to an earlier start to this process, a complete assessment of this report suggests that the health of the labor market remains problematic,” he said.