Weak Job Market Adds Fewer Jobs, Unemployment Drops to 8.1%

Arthi Gupta
07 Sep, 2012
New York City

Net new hiring in the U.S. fell below 100,000 for the second month in three months as employers avoid expanding staff. Nonfarm payroll employment in the U.S. rose by 96,000 in August and fell far short of the target set by most economists. Intel lowered third quarter revenue outlook.

[R]10:30 AM New York – Net new hiring in the U.S. fell below 100,000 for the second month in three months as employers avoid expanding staff. Nonfarm payroll employment in the U.S. rose by 96,000 in August and fell far short of the target set by most economists. Intel lowered third quarter revenue outlook.[/R]

Stocks in early trading were on a choppy ride after the latest unemployment data offered a halting and slow job market recovery.

In all, employers added 96,000 net new jobs, substantially slower growth than in July and sharply below the 200,000 monthly new jobs needed to make a significant dent in the unemployment rate.

Economy has struggled to add new jobs since its fast pick up in January and February helped by the warm weather and improved construction. Hiring has slowed steadily since then and dipped to the low of 80,000 in June.

In a Presidential election year, the unemployment data take on added significance as the President Barack Obama seeks a second term and the nation struggles to recover from a financial-crisis-driven-economic-recession that has as many as 23 million people still looking for work.

However, European markets gained for the second day on the optimism of the euro after the European Central Bank offered to buy unlimited amount of euro bonds from the struggling nations but only under strict lending conditions.

In Asian news, China’s National Development and Reform Commission approved nearly 55 infrastructure projects worth more than 1 trillion yuan or $158 billion.

The announcement is significant as China is due to release a set of economic data on Sunday.

U.S. Employment Climbs

Total nonfarm payroll employment in the U.S. rose by 96,000 in August, according to a report released by the U.S. Labor Department today and below the revised 141,000 in July.

Employment in food services and drinking places increased 28,000 in August and 298,000 over the past 12 months.

In August, average hourly earnings for all employees on private nonfarm payrolls edged down 1 cent to $23.52.

In a separate survey the labor agency reported unemployment rate dropped to 8.1% in August from 8.3% in July as more unemployed workers were discouraged and stopped looking for work. Overall labor force declined by 368,000 in the month.

The private sector added 103,000 net new jobs and the number of jobs in all branches of the government declined 7,000.

Lexington Realty Trust to Acquire Net Lease Strategic Assets Fund

Lexington Realty Trust agreed to acquire Inland American''s interest in Net Lease Strategic Assets Fund L.P., an existing joint venture between Inland and Lexington formed in 2007 in a transaction valued at approximately $480 million. This transaction expands Lexington''s asset base and consolidates Lexington''s ownership of a 98.7% leased portfolio, which Lexington owned and/or managed since before NLS was formed.

Earnings Review

Comverse Technology, Inc. ((CMVT)), the software and systems provider reported second quarter total revenue rose to $383.65 million from $377.01 million in the prior-year quarter. Net loss for the quarter narrowed to $0.27 million from $39.7 million in the year-ago period. On a per share basis, the company reported breakeven for the quarter compared to loss of 19 cents last year.

Intel Corporation ((INTC)), the semiconductor chipmaker estimates third quarter revenue of $13.2 billion, plus or minus $300 million compared to the previous expectation of $13.8 billion to $14.8 billion.

Lululemon Athletica inc. ((LULU)), the technical athletic apparel retailer reported second quarter net revenue increased 33% to $282.6 million from $212.3 million in the second quarter of fiscal 2011. Comparable stores sales for the second quarter increased 15% on a constant dollar basis.

Net income attributable to the company climbed to $57.22 million or 39 cents per diluted share from $38.38 million or 26 cents per share the prior-year.

The Cooper Companies, Inc. ((COO)), the contact lens maker said third quarter revenues rose 8% to $378.2 million from the same quarter last year. Net income in the quarter climbed to $66.9 million or $1.36 per share compared to $44.2 million or 90 cents per share for the year-ago quarter.

The Kroger Co. ((KR)), the retailer reported second quarter sales rose to $21.73 billion compared with $20.91 billion in the comparable period in 2011. Net earnings in the quarter dipped to $279.1 million or 51 cents per diluted share compared to $280.8 million or 46 cents per share a year ago.