GM Said to Name Barra as First Female CEO, Succeeding Akerson
Payrolls Decline More Than Forecast as Teachers Fired
The U.S. lost more jobs than forecast in September as local governments fired teachers and other workers in response to declining tax revenue.
Payrolls fell by 95,000 workers after a revised 57,000 decrease in August, Labor Department figures in Washington showed today. Private employers added 64,000 jobs, less than forecast. Wages and the workweek stagnated.
The dollar weakened and the Dow Jones Industrial Average closed above 11,000 as the report bolstered speculation the Federal Reserve will embark on a renewed round of large-scale asset purchases to spur growth. New York Fed President William Dudley said last week that further action is “likely to be warranted” unless the labor market improves.
“The private-sector growth is somewhat heartening but in total you have to expect that state and local and government jobs are going to be a drag for a number of months and perhaps a number of quarters,” Bill Gross, co-chief investment officer at Pacific Investment Management Co. in Newport Beach, California, said in a radio interview on “Bloomberg Surveillance” with Tom Keene. Gross called the report a “strong signal” for further Fed action.
The dollar decreased 0.3 percent to 82.14 yen at 4:31 p.m. in New York. The yield on the 10-year Treasury note fell to 2.38 percent from 2.39 percent late yesterday. The Dow rose 0.5 percent to 11,006.48, the highest close since May 3.
The unemployment rate held at 9.6 percent in September, the Labor Department said. The rate was forecast to rise to 9.7 percent, according to the median forecast in a Bloomberg News survey of 83 economists. Total payrolls were projected to fall by 5,000, while private payrolls were forecast to rise by 75,000. Revisions show that companies hired 93,000 in August and 117,000 in July, indicating a slower pace of job growth.
Government payrolls decreased by 159,000 last month. State and local governments reduced employment by 83,000, while the federal government lost 76,000 jobs as census workers were fired.
State and local governments from New Jersey to California are firing workers to balance their budgets as declining property values and slowing economic growth squeeze tax revenue.
Public schools in New Jersey were set to start the academic year down 10,000 jobs, including 7,000 educators who chose to retire, Steve Wollmer, a spokesman for the New Jersey Education Association, a union that represents teachers, said in August after Governor Chris Christie slashed $1.3 billion in aid to schools and local governments.
Today’s jobs report is the last before the Nov. 2 congressional elections that threaten to deprive the Democrats of their majorities in the House and Senate, partly as a result of voter disenchantment with President Barack Obama’s handling of the economy.
Obama’s job approval over a three-day period that ended Oct. 5 was 43 percent, compared with 53 percent at the same time last year, according to a poll from Princeton, New Jersey-based Gallup Inc.
“We need to continue to explore ways that we can help states and local governments maintain workers who provide vital services,” Obama said today in an appearance in Bladensburg, Maryland. “At the same time, we have to keep doing everything we can to accelerate this recovery.”
Obama on Aug. 10 signed into law legislation providing $26 billion in aid to state governments. The bill was designed to prevent thousands of layoffs of teachers and other public service employees.
Inventories at wholesalers rose 0.8 percent in August, more than forecast, as companies kept stockpiles in line with demand, according to a separate report today from the Commerce Department. Sales increased 0.5 percent.
The jobless rate has equaled or exceeded 9.5 percent for 14 consecutive months, surpassing the 13-month period from mid 1982 to mid 1983 as the longest span of elevated joblessness since monthly records began in 1948.
“If we’re only creating jobs at this pace, the unemployment rate is going to go higher,” said Nigel Gault, chief U.S. economist at IHS Global Insight in Lexington, Massachusetts, who forecast a 65,000 gain in private payrolls. “We aren’t creating enough jobs to keep it steady.”
The S&P 500 surged 8.7 percent last month, making it the biggest September gain since 1939, amid speculation the world’s largest economy will avoid slipping back into recession and bets that the Fed will buy more debt to support the recovery.
“Further action is likely to be warranted unless the economic outlook evolves in a way that makes me more confident that we will see better outcomes for both employment and inflation before too long,” the New York Fed’s Dudley said in an Oct. 1 speech, a day after Fed Chairman Ben S. Bernanke said in a statement that the central bank has a duty to aid the economy.
James Bullard, president of the St. Louis Fed, said earlier today that chance of a renewed recession has diminished and there may not be a strong enough case for additional stimulus. The Federal Open Market Committee next meets Nov. 2-3.
“The risk of double-dip recession has probably receded some in the last six to eight weeks,” Bullard said in an interview with CNBC before the jobs report. “The economy has slowed, but it hasn’t slowed so much that it’s an obvious case to do something.”
The economy grew at a 1.7 percent annual pace in the second quarter after expanding at a 3.7 percent rate in the first three months of the year and 5 percent at the end of 2009.
The unemployment rate is forecast to average 9.2 percent next year, according to the median forecast in a Bloomberg survey of economists last month.
The buying power of consumers whose purchases make up nearly 70 percent of the economy isn’t improving, today’s report showed. Average hourly earnings were little changed at $19.10, and the average work week for all workers held at 34.2 hours.
The decrease in overall payrolls reflected a 77,000 decline of temporary workers hired by the government to conduct the decennial population count and a 49,800 drop in teaching jobs at the local government level.
Manufacturing payrolls decreased by 6,000 after declining 28,000 a month earlier. Economists projected a 2,000 increase for September. Employment at service-providers decreased 73,000. Construction companies subtracted 21,000 workers and retailers hired 5,700 workers.
The so-called underemployment rate -- which includes part- time workers who’d prefer a full-time position and people who want work but have given up looking -- increased to 17.1 percent from 16.7 percent.
The number of temporary workers rose to 16,900 after adding 17,700 in August. Payrolls at temporary-help agencies often slows as companies seeing a steady increase in demand take on permanent staff.
The unwinding of census employment has distorted the payroll figures for months as the government dismissed workers as the count winds down. Only about 6,000 census workers remain on the payrolls, indicating September may be the last month the jobs data will be distorted.
The Labor Department today also published its preliminary estimate for the annual benchmark revisions to payrolls that will be issued in February.
The revision may mean the worst recession since the 1930s resulted in the loss of 8.73 million jobs, up from the 8.36 million currently on the books.
Revisions to July and August figures showed bigger decreases in payrolls than previously estimated. The adjustments reflected bigger losses in government, while private payrolls were pushed up. Companies hired 93,000 workers in August and 117,000 in July, compared with previously estimated gains of 54,000 for each month.
While some companies are still firing employees, others are recalling workers. American Airlines, the third largest U.S. airline, plans to recall 545 flight attendants and 250 pilots to meet demand for international flights as it begins it begins an alliance with British Airways Plc and Spain’s Iberia.
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