U.S. private sector starts hiring

A decline in government employment offset an increase in private-sector hiring and caused the U.S. economy to shed 54,000 jobs in August.

Underlying the overall drop was the encouraging sign that the private sector actually added 67,000 jobs during the month, the Labour Department said Friday.

That just wasn't enough to offset the 114,000 government jobs lost as Washington laid off temporary workers hired to conduct the census.

"Private sector job growth is still modest, no question there. But the picture is looking a little less bleak," BMO economist Jennifer Lee noted.

The unemployment rate moved higher as more than a half-million Americans resumed their job searches, encouraged by better economic signs. 

When the unemployed stop looking for work, they are no longer counted in the jobless rate. The total number of officially unemployed Americans now sits just shy of 15 million people.

Speaking in Washington, U.S. President Barack Obama took a cautiously optimistic tone in reaction to the news.

The increase in private-sector hiring "reflects the steps we've already taken to break the back of this recession, but it's not nearly good enough," Obama said.

He again took the opportunity to press lawmakers to pass his jobs bill when they return from summer break next month. The U.S. president has accused his congressional opponents of dragging their feet on the bill due to partisan bickering.

Average hourly earnings also increased by six cents US, or 0.3 per cent, to $22.66 US in August. Over the past 12 months, average hourly earnings have increased by 1.7 per cent.

The average work week for those with a job stayed steady at 34.2 hours per week.

"The good news is that American companies are hiring," BMO economist Sal Guatieri said. "The bad news is that they aren’t doing so fast enough to prevent the number of unemployed [now 14.9 million] from rising."