Remember last month when the unemployment rate shot up to 5.7% from 5.1%? Well, in August, things continued to deteriorate in the jobs scene. Unemployment increased to 6.1% and nonfarm payrolls decreased by 84,000, with concentrated losses in manufacturing and employment services, interestingly enough. In the past 12 months, according to the Labor Department, the number of unemployed has increased by 2.2 million and the unemployment rate has risen by 1.4% in the past year.
That these most recent losses came from manufacturing doesn’t reflect well on our economy in the near term, despite Q2 estimated GDP coming in at 3.3% and the dollar recovery that we have been enjoying.
Over the past six weeks, the U.S. dollar index, which measures the strength of the greenback against a basket of six major currencies, has increased to 0.78, up from 0.72. A good show, but most of the dollar’s strength is relative to declining currencies elsewhere as they grapple with inflation and a now global economic slowdown, rather than improving U.S. fundamentals, such as unemployment and inflation. In July, Labor announced that the consumer price index increased 0.5%, and that it was 5.6% higher than this time last year.
During our current economic malaise, one of the bright spots in the U.S. economy has been exports; the declining value of the dollar making them more attractive to non-U.S. buyers who get to purchase them on sale. Now our strengthening dollar is now seemingly working against manufacturing, and the result is more out of work Americans.