U.S. jobless rates fall with shrinking labor force

by The City Wire staff ([email protected]) 58 views 

The unemployment rate in the U.S. unexpectedly fell to 7.8% in September, the lowest since President Barack Obama took office in January 2009, as employers took on more part-time workers.

The economy added 114,000 workers last month after a revised 142,000 gain in August that was more than initially estimated, Labor Department figures showed today in Washington.

The jobless rate dropped from 8.1%, and hourly earnings climbed more than forecast.

“We’re seeing some firming in the labor market,” said Dean Maki, New York-based chief U.S. economist at Barclays Plc. “It’s still not booming or extraordinarily robust, but it is a labor market that we expect to continue to be firm enough to push the unemployment rate lower.”

Unemployment had been higher than 8% since February 2009, the longest stretch since monthly jobless figures were first compiled in 1948. The 7.8% matches the January 2009 figure.

The decline in the unemployment rate is “good news for Obama,” said Alan Abramowitz, a political scientist at Emory University in Atlanta. The drop below 8%  is “symbolically important” to voters, he said.

Only one president, Ronald Reagan, has been re-elected since World War II with unemployment above 6%. On Election Day 1984, the rate was at 7.2%, having fallen almost three percentage points in the previous 18 months.

FEWER JOBS
“This is not what a real recovery looks like,” the former Massachusetts governor said in a statement. “We created fewer jobs in September than in August, and fewer jobs in August than in July.”

In Canada, which sends about three-quarters of its exports to the U.S., employment last month rose more than five times faster than economists projected on gains in full-time positions from retailing to construction.

The 52,100 increased followed an August gain of 34,300, Statistics Canada said today in Ottawa. The jobless rate rose to 7.4% from 7.3% as the labor force grew.

The median estimate of 92 economists surveyed by Bloomberg called for U.S. payrolls to increase by 115,000. Revisions to July and August added a total of 86,000 jobs to payrolls in those months.

The unemployment rate, derived from a separate survey of households, was forecast to rise to 8.2 % according to the survey median. Estimates ranged from 8% to 8.3%.

UNDEREMPLOYMENT
The household survey showed an 873,000 increase in employment, the biggest since June 1983, excluding the annual Census population adjustments. Some 582,000 Americans took part- time positions because of slack business conditions or because they were the only jobs they could find.

Some full time jobs are being turned into part-time positions.

Jonathan Bethly, 26, of Dunwoody, Ga., says his hours as a cook at a restaurant and sports bar have been cut in half from 40 hours a week. He recently started to look for a late-night or overnight shift to supplement his pay.

“My hours gradually started coming down, and they have really come down,” he said. “I need to find another job. I am in desperate need for a couple checks.”

Because of the increase in part-time employment, the so- called underemployment rate — which includes those part-timers who’d prefer a full-time position and people who want work but have given up looking — held at 14.7%

JOBS BY SECTOR
Private payrolls, which exclude government agencies, rose by a less-than-forecast 104,000 in September. They were projected to advance by 130,000, the survey showed.

Factories eliminated 16,000 positions, compared with the survey forecast of no change and following a 22,000 decrease in the previous month. September and August marked the worst two months for manufacturing employment since December 2009 – January 2010.

Employment at private service-providers increased 114,000. Construction companies added 5,000 workers, and retailers hired 9,400 more employees.

Government payrolls increased by 10,000 after a 45,000 jump the month before. The revised August gain reflected a surge in the hiring of teachers.

FISCAL CLIFF
Companies may hold back on hiring plans amid concern over Europe’s weakening economy and the so-called fiscal cliff, a combination of more than $600 billion of tax increases and government spending cuts that will take effect next year if Congress doesn’t act.

The share of U.S. chief executive officers planning to add employees or invest more in the next six months declined last quarter, and a bigger share said they’d cut jobs and spending, according to a Business Roundtable survey last month. The group’s economic-outlook index slumped to the lowest since 2009.

“Over the past several months, we’ve seen the economy lose some of the momentum it had generated coming into the year,” Carl Camden, CEO and president at temporary-staff provider Kelly Services Inc., said during a Sept. 13 conference. About a year ago, “we were seeing good signs of a fairly solid recovery. But all of that is definitely slowed and you see that in staffing volumes around the world.”

FED POLICY
Signaling that it can’t combat a slowdown in growth caused by stricter fiscal policy, the Fed last month said it would hold its target interest rate near zero until at least mid-2015 to stimulate more hiring.

The central bank also began a third round of stimulus, buying $40 billion in mortgage bonds a month. The S&P 500 rose the next day to its highest close since December 2007.

“We’re looking for ongoing, sustained improvement in the labor market,” Fed Chairman Ben S. Bernanke told reporters following the announcement on Sept. 13. “What we’ve seen in the last six months isn’t it.”