The Labor Department reported on the nation’s employment situation and the picture
remains downbeat. The nation lost 84,000 jobs in August and the unemployment rate
rose to 6.1%. Both of these figures were higher than the consensus forecasts. The U.S.
has now lost 605,000 jobs this year and the unemployment rate is now the highest since
September 2003.

A big part of the job losses occurred in the manufacturing sector, especially the auto
industry. The problems in the auto industry were reflected throughout the jobs report.

• The construction industry lost 51,000 jobs.
• This is clearly a reflection of the turmoil that currently exists in the housing industry.

• Manufacturing lost 61,000 jobs.
• The fields related to autos that also lost jobs were as follows:
  • Durable Goods: Transportation Equipment lost 45,000 jobs.
  • Retail Trade: Motor Vehicle Parts lost 14,000 jobs.
  • Retail Trade: Auto Dealers lost 12,000 jobs.
• Professional services lost 53,000 jobs.
  • Most of the losses occurred in the Temporary Help category which lost
    37,000 jobs.
• The Construction industry lost 8,000 jobs.
• The pace of job loss in construction has clearly slowed as August’s
  number is lower than the 20,000 jobs lost in July which was lower than the
  50,000 jobs lost in June.

Not all parts of the economy lost jobs. The positive areas of the economy were as
follows:

• Health Care added 38,000 jobs.
• Government added 17,000 jobs
  • Most of the gains were in local government jobs.
• Educational Services added 16,000 jobs
• Mining added 12,000 jobs.

An analysis of the unemployment rate showed the following:

• The unemployment rate for adult women was 5.3%
• The unemployment rate for adult men was 5.6%
• The unemployment rate for teenagers was 18.9%

On the wage front, workers saw their salaries rise slightly faster than the consensus
forecast. Average hourly earnings rose .4% compared to the forecast for a .3% increase.
On a year-over-year basis, average hourly earnings were 3.6% higher than last August.

The employment data continues to show that the economy is struggling. We believe that
the Federal Reserve will keep the Federal Funds rate unchanged through the end of the
year due to the weak economy and a financial system that is still not operating efficiently.