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September 07, 2001
Unemployment Shoots to 4.9%
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national unemployment rate jumped to 4.9 percent in August, its highest level in nearly four years, the U.S. Labor Department announced on Friday.

The rate had been holding steady at about 4.5 percent since April.

In announcing the rate increase, the Labor Department also said the number of people without jobs swelled by more than half a million in August.

Businesses slashed a total of 113,000 jobs, after adding 13,000 in July.

Katharine G. Abraham, commissioner of the department's Bureau of Labor Statistics, said manufacturing once again took the biggest hit last month, though other sectors struggled as well.

"There was also a large employment decline in transportation and public utilities," she said. "Most other major industries showed little or no change in employment over the month."

The Associated Press noted that while the August jobless rate is still low by historical standards, it marks a sharp deterioration from the three-decade low of 3.9 percent hit in several months last year.

Yet some economists told the AP that the report was not devastating news because they expect the rate to rise to above 5 percent before recovery filters to the labor market.

"The unemployment rate is always at its highest at the dawn of new recoveries,'' said Ken Mayland, president of ClearView Economics. "It's always darkest before the dawn, that's one metaphor that is particularly relevant here."

But it may be small comfort to the newly unemployed, especially those who lost positions in manufacturing, which shed another 141,000 jobs in August. Since July 2000, the industry has lost slightly more than 1 million jobs.

The unemployment rate for manufacturing workers rose in August to 5.7 percent, up from 3.5 percent a year earlier, the BLS reported.

Though almost component of the manufacturing sector lost jobs, industrial machinery (-25,000) and electrical equipment (-19,000) continued to account for a disproportionate share of the overall decline, Abraham said.

Two other manufacturing industries with particularly large employment declines in August were apparel (-20,000) and furniture (-10,000), she said.

How other sectors fared

Transportation. Manufacturing's woes continued to affect transportation employment, which fell substantially in August, most notably in trucking and warehousing (-8,000).

Construction. Employment there changed little over the month. After adding 221,000 jobs in 2000 and continuing to expand into the first part of this year, the industry shown no net job growth since March.

Services. The good news: Employment rose by 72,000 in August. The bad news: Even with that gain, job growth has averaged only 10,000 per month over the past five months, compared with 93,000 per month in 2000 and 131,000 per month in 1999.

In August, the overall gain reflected continued strength in health services (32,000). There was also an unusually large gain in social services employment (33,000); combined with a weak July, this increase put the industry back on its trend growth path, the BLS said.

Computer services employment declined by 5,000 in August; this was the first monthly decline since February 1988, although growth in the industry had slowed in recent months. Employment growth also has slowed in engineering and management services, another industry that had been expanding rapidly. Help supply employment was about unchanged in August, following sharp declines totaling more than 400,000 since last September.

Long-term unemployment rose

Both the number of newly unemployed persons (those jobless less than five weeks) and the number of long-term unemployed (those jobless 15 weeks and longer) rose substantially in August. Long-term unemployment totaled 1.8 million, up from 1.3 million at the end of last year.

The number of discouraged workers - those who have stopped seeking work because of discouragement over their job prospects - was 335,000 in August, somewhat higher than a year earlier, the BLS reported.
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