BUREAU OF LABOR STATISTICS, DAILY REPORT, WEDNESDAY, SEPTEMBER 22, 2010 Nonfarm payroll employment grew in 14 states in August, while falling in 36 states and the District of Columbia, according to data released Sept. 21 by the Labor Department's Bureau of Labor Statistics. (“Jobless Rates Fell in 13 States in August, As Payrolls Increased in 14 States, BLS Says”, Daily Report, http://news.bna.com/dlln/DLLNWB/split_display.adp?fedfid=17810175&vname=dlrnotallissues&fn=17810 175&jd=a0c4f3f9r4&split=0) The largest increases in payroll employment occurred in North Carolina (18,600), Missouri (3,600), and Tennessee (2,500). Only the increase in North Carolina was significant in relation to the state's size. Significant payroll job losses occurred in Michigan (50,300), Texas (34,200), and California (33,600). Meanwhile, BLS reported that unemployment rates rose in 27 states in August, fell in 13 states, and held steady in 10 states and Washington, D.C. Two of the jobless rate increases were significant in relation to the state's size, including those occurring in Florida (0.2 percentage point, from 11.5 percent to 11.7 percent) and Maryland (0.2 percentage point, from 7.1 percent to 7.3 percent). Another two states posted significant decreases: Mississippi (0.8 percentage point, from 10.8 percent to 10 percent) and Alabama (0.5 percentage point, from 9.7 percent to 9.2 percent). The states with the highest unemployment rates last month were Nevada (14.4 percent) and Michigan (13.1 percent). Another 11 states had jobless rates of at least 10 percent in August. Unemployment rates in Maryland and Virginia rose in August, according to federal government data released Tuesday, signaling a setback for the Washington area's economic recovery and highlighting the fragile state of the U.S. labor market. (“Jobless rate rises in Maryland, Virginia, steady in D.C.”, V. Dion Haynes, The Washington Post, http://www.washingtonpost.com/wp- dyn/content/article/2010/09/21/AR2010092106746.html) In Maryland, the jobless rate jumped to 7.3 percent after holding for two straight months at 7.1 percent, according to the U.S. Bureau of Labor Statistics. The state lost a net of 5,700 jobs in August, officials said, even though the number of positions that were added was three times the national average. Virginia's unemployment rate rose to 7.0 percent, from 6.9 percent in July, reflecting a net loss of 2,700 jobs. The District's jobless rate remained at 9.9 percent even as the city lost thousands of positions from such steady job creators as professional and business services employers. The jurisdictions' job losses pale in comparison with the tens of thousands of cuts during the peak months of the recession, and the jobless rates in Maryland and Virginia are well below the 9.6 percent national average. Still, the apparent shift in momentum was a discouraging sign for some economists and experts who earlier this year had pointed to falling unemployment rates as evidence that recovery was taking hold. The local jobs picture parallels trends in the national unemployment rate, which rose a tenth of a percentage point in August. Similarly, the nation is experiencing a sluggish recovery: Private-sector jobs are being created, but not quickly enough to put a significant number of unemployed people back to work. Even though the District's unemployment rate didn't rise, the city's data still reflect a troubling trend. The number of employed residents dropped by 2,900, while the number of the unemployed fell by only 200. Labor experts said this suggests that many long-term unemployed people became discouraged, stopped looking for work and were no longer counted in the data - a reversal of a scenario that played out earlier in the year. Employment in the temporary help services industry more than doubled during 1990-2008, from 1.1 million to 2.3 million, with a growing share of the workers employed in higher-skilled and higher-paying occupations, according to an analysis published by the Labor Department's Bureau of Labor Statistics. (“BLS Says Temporary Help Jobs Expanded Over Past Two Decades, Remain Volatile”, Daily Report, http://news.bna.com/dlln/DLLNWB/split_display.adp?fedfid=17810172&vname=dlrnotallissues&fn=17810 172&jd=a0c4f3e8c5&split=0) The share of total U.S. employment accounted for by this relatively new industry exploded during the 1990s, from 1.0 percent to a peak of 2.0 percent in 2000, then declined sharply in the early part of this decade before climbing back to 1.7 percent in 2008, three BLS economists said in an article in the August issue of Monthly Labor Review, posted recently on the agency's website. “Once known as a source of stopgap labor used primarily for routine clerical assignments, temp help services now plays an important role in the U.S. economy,” said Tian Luo, Amar Mann, and Richard Holden, all of BLS's West regional office for economic analysis and information in San Francisco. Two of the industry's major roles are providing a bridge to permanent employment for those who are out of work or changing jobs and acting as an early indicator of trends in the overall job market that is closely watched by federal policymakers, financial institutions, and economists, according to the study. “The tremendous growth of temporary help services has been driven by the flexibility and low labor cost of temporary workers,” the authors concluded. At the same time, they describe employment in the industry as “very volatile,” noting that temporary workers have borne a disproportionate share of job losses in recent recessions. The numbers of Hispanic-owned businesses and jobs at those firms both increased faster than those of nonminority-owned businesses between 2002 and 2007, the Department of Commerce's Census Bureau said Sept. 21. (“Data Show Growth in Hispanic-Owned Firms”, Daily Report, http://news.bna.com/dlln/DLLNWB/split_display.adp?fedfid=17810178&vname=dlrnotallissues&fn=17810 178&jd=a0c4f3h0r7&split=0) The number of Hispanic-owned businesses grew by 44 percent, from 1.6 million firms to 2.3 million firms, more than twice the national growth rate of 18 percent, while employment at firms with paid workers rose by 26 percent, from 1.6 million jobs to 2.3 million jobs, compared with a gain of less than 0.1 percent at nonminority-owned businesses, the agency said, based on a 2007 survey of business owners. By comparison, over the same period, the Hispanic population expanded by 18 percent, while the nonminority population was up 1 percent. Nearly one-third of Hispanic-owned businesses (30 percent) operated in the construction, repair and maintenance, and personal and laundry services industries, while just over half of all Hispanic-owned business revenue (50.8 percent) came from the wholesale and retail trade and construction industries. Lawrence Summers, director of the National Economic Council and a top adviser to President Obama, will leave the administration to resume his teaching job at Harvard, the White House announced Sept. 21. (“Summers, Head of NEC, to Leave At End of Year, White House Announces”, Diana I. Gregg, Daily Report, http://news.bna.com/dlln/DLLNWB/split_display.adp?fedfid=17810182&vname=dlrnotallissues&fn=17810 182&jd=a0c4f3k9m9&split=0) Summers, who leads the president's daily economic briefing, will leave at the end of the year, the administration said. “I will always be grateful that at a time of great peril for our country, a man of Larry's brilliance, experience and judgment was willing to answer the call and lead our economic team,” the president said in a statement. The departure of Summers, who served as Treasury secretary in the Clinton administration, follows that of other members of President Obama's economic team, starting with Peter Orszag, the budget director, in July, and more recently Christina Romer, chair of the Council of Economic Advisers. Diane Swonk, chief economist of Mesirow Financial, said Summers's departure does not come as a surprise. “It's been rumored for a long time, that he wouldn't be sticking around,” she told BNA. “Frankly, putting two years in this economy is a lot. We saw it with Romer. In an economy that's tough, blame the economist.” Federal Reserve policymakers Tuesday opened the door to new action to try to boost the economy. They just didn't step on in. (“Fed statement sets table for possible action on economy in fall”, Neil Irwin, The Washington Post, http://www.washingtonpost.com/wp- dyn/content/article/2010/09/21/AR2010092106745.html) With economic growth sluggish, the jobless rate seemingly stuck near 10 percent and inflation well below the level the Fed aims for, officials of the central bank are "prepared to provide additional accommodation if needed" to support the recovery and get inflation higher, said a statement from the Fed's policymaking committee. But they stopped short of taking action Tuesday. In practice, that "additional accommodation" would probably consist of buying vast quantities of bonds, an unconventional step to try to pump hundreds of billions of dollars into the economy. Such an action would support growth by lowering long-term interest rates, making it cheaper for Americans to take out a mortgage or for businesses to borrow money to expand. In one of the idiosyncrasies of monetary policymaking, merely suggesting that such an action has become more likely caused financial markets to react in a way that helps achieve the goal. The interest rate on 10-year Treasury bonds fell to 2.57 percent Tuesday from 2.7 percent, reflecting the expectation of future bond purchases; that lower rate should in turn make mortgages and other long-term loans cheaper immediately. With its statement Tuesday, the Fed was not committing to pulling the trigger on such an action, known as "quantitative easing," at its next meeting, Nov. 2 and 3. But it was a clear signal that leaders are more inclined in that direction than they had seemed just a few weeks ago. The dollar fell to the lowest level in six months versus a basket of currencies including the euro and yen on speculation the Federal Reserve’s willingness to ease monetary policy further will damp demand for U.S. assets. (“Dollar Drops to Lowest Level Since March as Fed Hints at Easing”, Allison Bennett and Catarina Saraiva, Bloomberg News, http://www.bloomberg.com/news/2010-09-22/dollar-drops-to-lowest- level-since-april-as-federal-reserve-offers-easing.html) The greenback weakened after U.S. policy makers said yesterday that they “will provide additional accommodation if needed” to spur growth. The yen strengthened for a third day to levels that may trigger more selling by the Japanese government. The euro rose versus the dollar to the strongest since April 21 as Portugal sold 750 million euros ($1 billion) of bonds. Gold futures reached a record high. “It’s going to be a continuation of yesterday -- the Fed’s plan to have more liquidity,” said Brian Taylor, chief currency trader a Manufacturers & Traders Trust in Buffalo, New York. “I think their statement alone hurts the U.S. dollar on yield.” Prices of U.S. single-family homes fell for a second straight month in July, the Federal Housing Finance Agency (FHFA) said on Wednesday. (“US Home Prices Inch Lower In July for Second Straight Month”, Reuters, http://www.cnbc.com/id/39305922) The FHFA's house price index dropped by a seasonally adjusted 0.5 percent after declining by a revised 1.2 percent in June, which was previously reported as a 0.3 percent fall. The regulator's index is calculated by using purchase prices of houses financed with mortgages sold to or guaranteed by mortgage finance companies Fannie Mae or Freddie Mac. U.S. home loan demand fell for a third straight week though fixed mortgage rates slid near all-time lows, with potential buyers still unnerved by the jobs market, Mortgage Bankers Association data showed on Wednesday. (“Mortgage Demand Falls Despite Low Loan Rates”, Reuters, http://www.cnbc.com/id/39302841/) While the housing market is seen unlikely to plunge anew, it lacks traction. Unemployment and underemployment prevent many buyers from making such a big financial commitment. Loan applications to buy homes and refinance declined last week despite average 30-year mortgage rates dropping 0.03 percentage point to 4.44 percent. At a record low dating back to 1990, the rate fell to 4.43 percent last month. "I don't think we're going to see massive dips like we did before, but housing can't recover until employment recovers," said Margaret Kelly, chief executive of RE/MAX in Denver. The housing market has been whip-sawed by a surge in demand before, and a plunge in demand after homebuyer tax credits ended on April 30. Now the market enters a seasonally slower period, when sales typically slow after the school year begins and the winter approaches. The industry group's mortgage market index that includes both purchase and refi applications fell 1.4 percent last week, seasonally adjusted, with purchase loan demand down 3.3 percent and refi requests off 0.9 percent. DUE OUT TOMORROW: Mass Layoffs – August 2010 Editor’s Note: The BLS Daily Report is a compendium of excerpts from media reports intended to provide BLS employees with a current look at how economic statistics are being covered by reporters. BLS does not verify the accuracy of the excerpted information. The Daily Report is intended for internal distribution only.