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Economy adds 148,000 jobs; unemployment rate drops

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By Thomas Olson
Tuesday, Oct. 22, 2013, 9:45 a.m.
 

The nation's job report for September suggests employers kept a lid on hiring as the government shutdown loomed, providing more optimism that the Federal Reserve is unlikely to scale back its monthly bond purchases aimed at boosting the economy.

The Labor Department said Tuesday that employers added 148,000 jobs last month, down from a revised 193,000 in August and lower than the 180,000 gain economists expected. The number shows that the job market continued to soften even as it faced fallout from budget wrangling that forced a 2½-week government shutdown and delayed the report.

Temporary layoffs of federal workers and government contractors will probably skew October's job gains. That means a clearer view of the job market may not emerge until the November jobs report is issued in December.

“I don't think this report makes much difference to the Fed,” said Gus Faucher, senior economist at PNC Financial Services Group. “They are going to be much more interested in what the October and especially the November reports indicate.”

To spur economic activity, the Fed has been buying $85 billion a month in bonds to keep long-term interest rates low. It has pledged to maintain that policy until unemployment falls to about 6.5 percent. The Labor Department reported unemployment inched down to 7.2 percent in September from 7.3 percent in August. By comparison, unemployment in the seven-county Pittsburgh region stood at 6.8 percent in August, according to most-recent data.

Average 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 from April through June and well below the 207,000-a-month pace from January through March.

Faucher said he did not think the employment picture would improve enough for the Fed to taper its bond buying until early 2014.

The number of unemployed people in the nation declined by 61,000 last month to 11.3 million, according to the government's survey of households, which determines the jobless rate.

Elise Gould, an economist at the Economic Policy Institute, said the decline in the jobless rate was “not a significant change” because more people should be employed.

The economy still has about 1.8 million jobs to add to catch up with job losses from the Great Recession, said Gould, calling the 148,000 jobs added last month “nowhere near what we need to recover.” A healthy economic recovery should generate at least 240,000 jobs a month, according to the Small Business & Entrepreneurship Council, a business policy advocacy group.

Gould estimates that September's employment rate would have been about 10 percent, if about 5 million people of working age were still part of the labor force. When people stop looking for a job, they are no longer counted as part of the labor force, artificially lowering the unemployment rate.

The labor force participation rate — the share of the working-age people with a job or actively looking for one — was unchanged at 63.2 percent, and remains the worst in 35 years.

The labor force did rise by 73,000 last month, however, which helped the jobless rate improve “for the right reason,” Faucher said. It shows more people were working or actively looking for a job, “which means they feel the economy is improving and are a little more positive about their job prospects.”

Employment gains were most encouraging in construction, which added a robust 20,000 jobs in September, the highest in seven months, said the government's survey of employers. The jobless rate for construction, especially hard-hit by the housing crisis, fell to a six-year low of 8.5 per­cent, according to the Associated General Contractors of America.

“I think we'll see consistent job growth for the rest of this year through 2014 as the housing market continues to improve” and retail and office construction picks up, Faucher said.

Professional and business services added 32,000 jobs; transportation and warehousing, 23,000 jobs; and wholesale trade, 16,000 jobs.

“Broad-based job gains in professional and business services indicates the economy is expanding,” he said.

But health care added a mere 7,000 jobs, far below the average monthly gains of 19,000 since January and 27,000 in 2012. Faucher said health care providers might have pulled back on hiring out of caution before the rollout of the Affordable Care Act.

Manufacturing employment rose by only 2,000, or just enough to offset the jobs lost in July and August combined. Most manufacturing job gains this year have been in durables, such as steel and autos, while nondurables have shed jobs, said Alan Tonelson, a research fellow at the U.S. Business and Industry Council.

“It's clear manufacturing job creation has been flat-lining,” he said.

The government revised August hiring upward to 193,000 from an initial 169,000. But it revised July data downward to 89,000 new jobs from 104,000.

The Associated Press contributed to this report. Thomas Olson is a Trib Total Media staff writer. He can be reached at 412-320-7854 or tolson@tribweb.com.

 

 
 


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