Payrolls Beat Forecast as Concerns Ease
American employers added more workers in September than forecast and figures for the prior two months were revised higher, easing concern the economy is tipping into another recession.
Payrolls rose by 103,000 after a 57,000 gain in August, the Labor Department said today in Washington. The median forecast in a Bloomberg News survey of economists called for an increase of 60,000. The figures reflected the end of a strike at Verizon Communications Inc. (VZ) that brought 45,000 people back to work. The jobless rate held at 9.1 percent.
Treasuries fell as the report added to evidence the world’s largest economy is maintaining its expansion. The pace of job growth is still too slow to push down the unemployment rate as companies hold back on hiring amid the debt crisis in Europe, political gridlock in the U.S. and a decline in stock prices.
“It’s steady growth at a painfully slow pace,” said Michael Englund, chief economist at Action Economics LLC in Boulder, Colorado, who forecast a gain of 100,000 jobs. “The economy isn’t doing well, but it didn’t lose the momentum that the markets feared.”
The yield on the 10-year Treasury note rose to 2.07 percent at 4 p.m. in New York from 1.99 percent late yesterday. The Standard & Poor’s 500 Index fell 0.8 percent to 1,155.46 at the close in New York.
Hours and earnings both increased, the report showed, and revisions to previous reports added a total of 99,000 jobs to payrolls in July and August.
Week of Data
The report capped a week of data indicating the economy is gaining strength after growing at the slowest pace in two years in the first half of 2011.
Manufacturing unexpectedly accelerated in September, propelled by gains in exports and production, according to figures from the Institute for Supply Management. Construction spending expanded in August, and orders for capital equipment increased by the most in three months, government data showed.
“The economy is certainly not as weak as it was thought to be over the last couple of months,” said Chris Rupkey, chief financial economist at the Bank of Tokyo-Mitsubishi UFJ Ltd. in New York.
Labor Secretary Hilda Solis used the report to push President Barack Obama’s $447 billion jobs plan consisting of tax cuts and infrastructure projects.
“We need to do more,” Solis said in a Bloomberg Television interview. Obama’s plan, proposed last month, will create between 1 million to 1.9 million jobs, she said.
Ford Motor Co. (F) is among companies planning to boost payrolls, saying this week said it has committed to add about 12,000 hourly jobs in its U.S. manufacturing plants by 2015 as part of an agreement with the United Auto Workers.
Other companies are more cautious. Citigroup Inc. (C), the third-biggest U.S. bank, said last month it will limit hiring to only “critical” jobs as the economic slowdown continues and revenue slumps.
“We are currently only filling positions we believe are critical to the line of business or function,” Shannon Bell, a spokeswoman for the New York-based bank, said in an interview Sept. 15.
Sustained increases of around 200,000 jobs a month are needed to reduce the jobless rate by about a percentage point over a year, according to Eric Green, chief market economist at TD Securities Inc. in New York.
Bringing Down Unemployment
“This is not the kind of job growth that brings unemployment down,” James Glassman, senior economist at JP Morgan Chase & Co. in New York, said in an interview on “Bloomberg Surveillance” with Tom Keene.
Estimates of the 91 economists surveyed by Bloomberg for overall payrolls ranged from a decline of 50,000 to a 115,000 increase. The unemployment rate was projected to hold at 9.1 percent, according to the survey median.
More Americans who would like a full-time job are settling for part-time work instead. They are counted in the underemployment rate, which increased to 16.5 percent, the highest this year, from 16.2 percent. The number of people working part-time for “economic reasons” jumped 444,000 to 9.3 million.
Unemployment has exceeded 8 percent since February 2009, the longest stretch of such elevated joblessness since monthly records began in 1948. Through September, the economy had recovered about 2.09 million of the 8.75 million jobs lost as a result of the 18-month recession that ended in June 2009.
“Economic growth remains slow,” Federal Reserve policy makers said Sept. 21 as they announced a plan to bring down longer-term lending rates. While officials said they “expect some pickup in the pace of recovery over coming quarters,” they anticipate “the unemployment rate will decline only gradually.”
Private payrolls, which exclude government jobs, rose 137,000 after a gain of 32,000 in the prior month, the Labor Department said.
Factory payrolls declined 13,000 in September, the biggest decrease since August 2010, after a 4,000 decline in August. Employment at service-providers increased 85,000 in September, the most since April. Construction employment climbed 26,000, the biggest gain since February and led by a jump in non- residential building.
Average hourly earnings rose 0.2 percent to $23.12. The average work week for all workers climbed six minutes to 34.3 hours.
Government payrolls decreased by 34,000 last month. Employment rose by 2,000 at state governments and slumped 35,000 at the local level.
New York Mayor Michael Bloomberg’s administration this week asked agency heads to cut spending by $2 billion over the next 18 months and freeze hiring on concern that a slowing economy may reduce city revenue.
“We’re looking at extreme economic uncertainty, and state and federal governments that are likely to further cut funds they return to the city,” Caswell Holloway, deputy mayor for operations, said in a statement. The mayor is founder and majority owner of Bloomberg News parent Bloomberg LP.
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