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Home / Business

US jobs report disappoints, misses estimates

AP
22 Oct, 2013 02:55 PM4 mins to read

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WASHINGTON (AP) The U.S. economy added fewer jobs than anticipated in September just 148,000 suggesting that employers held back on hiring before a 16-day partial government shutdown began Oct. 1. Economists had projected 180,000 new jobs.

Still, hiring last month was enough to lower the unemployment rate. The Labor Department said Tuesday that the rate fell to 7.2 percent from 7.3 percent in August. Unemployment remains historically high but is near a five-year low and is down from 7.9 percent at the start of 2013.

The tepid job growth makes it more likely that the Federal Reserve will maintain its level of bond purchases for the rest of this year. The bond purchases are intended to lower long-term interest rates and boost borrowing and spending.

The release of the September jobs report had been delayed 2 weeks by the shutdown, which likely further slowed economic growth and hiring. Temporary layoffs of federal workers and government contractors will probably depress October's job gain. That means a clear view of the job market may not emerge until the November jobs report is issued in December.

"The economy is too fragile for the Federal Reserve to touch," Sung Won Sohn, an economist at California State University, said. "The shenanigans in Congress have hurt confidence and increased uncertainties, most likely hurting both consumer and business spending as well as hiring."

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Job growth has fallen sharply in the past three months after a promising start this year. The economy has added an average of 143,000 jobs a month from July through September. That's down from the 182,000 average gain during from April through June and well below the 207,000-a-month pace from January through March.

The report "reinforces the impression that the labor market was losing a little momentum heading in to the shutdown," said Josh Feinman, global chief economist at Deutsche Asset and Wealth Management. "The labor market is continuing to create jobs. ...It's just frustratingly slow."

Stocks, however, surged after the report was released, likely because slower job gains mean the Fed will continue its stimulus efforts. The Dow Jones industrial average jumped more than 100 points in morning trading.

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A tight job market has discouraged many Americans from looking for work. The percentage of Americans working or looking for work remained at a 35-year low last month

The September jobs report showed that some higher-paying industries added jobs at a healthy pace. Construction companies, for example, added 20,000.

Transportation and warehousing gained 23,400 jobs, governments 22,000.

And average hourly pay ticked up 3 cents to $24.09. In the past year, hourly pay has risen 2.1 percent, ahead of the 1.5 percent inflation rate.

The department revised its estimates of job growth in July and August to show a slight net gain of 9,000. It said employers added 193,000 jobs in August, more than the 169,000 previously estimated. But it said just 89,000 were added in July, the fewest in more than a year and below the earlier estimated 104,000.

The deceleration in job growth was a key reason the Fed decided in September to hold off on slowing its $85-billion-a-month in bond purchases. Many economists think the lack of clean data will lead the Fed to put off any decision on the bond purchases until 2014.

"It reinforces their hesitancy," Feinman said of the September jobs report. "It's more validation for their hesitancy to taper in September."

Many economists say the shutdown cut $25 billion out of the economy and slowed growth to about a 2 percent annual rate in the October-December quarter. That's down from estimates before the shutdown that the economy would expand at a 2.5 percent annual rate.

But growth will likely be a bit higher in the first three months of next year, as consumers and businesses make purchases and investments that were delayed during the shutdown.

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