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WASHINGTON - Despite service-producing areas of the economy adding a net 23,000 jobs in August, the U.S. unemployment rate jumped to its highest level in nearly four years as companies dropped 113,000 workers from their payrolls.
The monthly report by the Labor Department’s Bureau of Labor Statistics showed the jobless rate climbing to 4.9 percent from 4.5 percent in July - the highest level since September 1997.
August's big drop in the number of workers on nonfarm payrolls followed a revised payrolls gain of 13,000 in July that was originally reported as a 42,000 jobs drop.
Construction employment was steady in August, adding 5,000 jobs.
The hardest hit area was the manufacturing sector’s loss of 141,000 jobs in August, the segment’s biggest drop since a 173,000 decline in July 1998. Since July 2000, manufacturing employment has plummeted by 1 million.
The report was far weaker than private economists had expected and bolstered expectations of further interest rate cuts by the Federal Reserve, according to a Reuters report. U.S. economists in a Reuters survey had expected the unemployment rate to only reach 4.6 percent and payrolls to fall by 33,000 in August.
| Historical Unemployment Rates (as a percent) | ||||||||||||
| YEAR | Dec. | Nov. | Oct. | Sept. | Aug. | July | June | May | April | March | Feb. | Jan. |
| 2001 | 4.9 | 4.5 | 4.5 | 4.4 | 4.5 | 4.3 | 4.2 | 4.2 | ||||
| 2000 | 4.0 | 4.0 | 3.9 | 3.9 | 4.1 | 4.0 | 4.0 | 4.1 | 4.0 | 4.0 | 4.1 | 4.0 |
| 1999 | 4.1 | 4.1 | 4.1 | 4.2 | 4.2 | 4.3 | 4.3 | 4.2 | 4.4 | 4.2 | 4.4 | 4.3 |
| 1998 | 4.4 | 4.4 | 4.5 | 4.5 | 4.5 | 4.5 | 4.5 | 4.4 | 4.4 | 4.7 | 4.6 | 4.7 |
| 1997 | 4.7 | 4.6 | 4.7 | 4.9 | 4.8 | 4.9 | 5.0 | 4.9 | 5.1 | 5.2 | 5.3 | 5.3 |
| 1996 | 5.4 | 5.4 | 5.2 | 5.2 | 5.1 | 5.5 | 5.3 | 5.6 | 5.6 | 5.5 | 5.5 | 5.6 |