Not only did the report show that there was no job growth last month, but it also found that the job market was significantly weaker in June and July than the government first reported. Revisions to earlier jobs reports showed that 81,000 fewer jobs were created than initially estimated.
4-Year Growth in Jobs Ends; Dow Off 200
By JEREMY W. PETERS
Employers eliminated 4,000 jobs in August, the Labor Department said today, bringing an end to four years of uninterrupted job growth.
Economists said the report provides the Federal Reserve with ample justification to lower interest rates at least a quarter point when it meets Sept. 18. But the numbers also raised fresh fears of a recession and suggested that the damage from the recent turmoil in financial markets could be spreading.
At the opening bell on the New York Stock Exchange, stocks dropped. And losses only deepened throughout the day. At noon, the Dow was off about 200 points, or 1.5 percent. The broader Standard & Poor’s 500-stock index and the Nasdaq composite index were down slightly more, as were European markets.
If the jobs report had been merely lackluster, it might have been welcomed by investors as a sign that fears of inflation had abated sufficiently to make the prospect of a Fed rate cut all but certain. The reversal in job growth, however, went far beyond expectations, raising fears that corporate profits will weaken as the market upheaval moves beyond the housing and financial sectors and casts a chill on the broader economy.
“That it was down 4,000 really is eye-catching,” said John Shin, an economist for Lehman Brothers. “What the payroll number confirms is that you may be seeing the damage spread across the rest of the economy.”
Investors flocked to safe haven investments like gold and government bonds. Prices today on an ounce of gold and the 10-year United States Treasury note jumped.
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