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Contradictory employment numbers released { October 6 2006 } Original Source Link: (May no longer be active)
http://www.nytimes.com/2006/10/06/business/06econcnd.htmlhttp://www.nytimes.com/2006/10/06/business/06econcnd.html
October 6, 2006
Job Growth Slows in September
By JEREMY W. PETERS
American businesses created a surprisingly paltry 51,000 net new jobs in September, the Labor Department reported today. Still, the unemployment rate ticked down a notch to 4.6 percent.
Only people who are actively seeking work are counted as unemployed, so it is not unusual for the unemployment rate and the job creation figures to give apparently contradictory readings about the job climate. Still, economists had forecast much stronger job growth for the month — closer to the 150,000 or so new jobs that they say are needed to keep up with population growth.
At the same time, though, the Labor Department revised its job-growth figure for August sharply upward, to 188,000 net new private nonfarm jobs, from 128,000 initially reported a month ago. It also revised its figure for July slightly upward. So some of the job creation that economists expected to see in September actually happened a bit earlier.
The report is a mixed bag for Republicans, who are trying to retain control of Congress, and for Democrats, who argue that the Republicans have left the economy on a wobbly footing. Only one more employment report is due before the Nov. 7 midterm elections.
President Bush, speaking this morning at a FedEx facility in Washington, cited the fresh employment statistics as he urged Congress to make permanent the tax cuts his administration has pushed through.
“Wages are going up, energy prices are falling, which means people are going to have more money in their pockets to save, invest or spend,” he said. “One sure way to hurt this economy is to take money out of the pockets of consumers or small business owners and send it to Washington, D.C.”
The unemployment rate, probably the most-watched of all economic indicators, has declined each month since peaking at 4.8 percent in July. But by all accounts, economic growth is slowing, and today’s report shows that job creation has all but dried up.
“There are a lot of anomalies for sure,” said Julia Coronado, senior United States economist with Barclay’s Capital. “It’s like reading tea leaves.”
Still, Ms. Coronado said, the report shows that over all, the labor market remains fairly healthy despite the paucity of new jobs in September. “If you sort through all these pieces, the report can’t be viewed as particularly weak,” she said.
The Labor Department reported that the percentage of Americans who are employed was unchanged in September at 63.1 percent, and wages and average hours worked showed almost no change from August.
These factors, along with other signs of a slowdown like softness in the housing market, have led some economists to conclude that in the coming months the country will broadly be headed for slower job growth and slightly higher unemployment.
“I think the underlying trend is toward labor market deceleration,” said Jan Hatzius, chief United States economist for Goldman Sachs.
Mr. Hatzius said he expects the unemployment rate to climb to about 5.25 percent early next year. “If you continue to see payroll growth in the 100,000 range or less, that probably will mean a gentle updrift in the unemployment rate eventually,” he said.
Manufacturing and retail were the sectors where the job picture was worst last month. Factories shed a net 19,000 jobs in September, while retailers eliminated 11,900 positions. On the growth side, the financial services sector added 16,000 jobs, and education and health services, 15,000.
The Labor Department also said today that, by its latest estimates, the number of jobs created from March 2005 to March 2006 was considerably higher than it initially thought. When it issues its annual revisions to national employment data in February 2007, the department said, it now expects the figure for that period to rise by 810,000.
The financial markets saw a mixed reaction to the mixed September report. Bond prices fell and the dollar gained value on the news, suggesting that investors see the prospects of an interest-rate decrease receding a bit. But stocks traded off slightly, suggesting that investors do not expect the jobs picture to buoy consumer spending.
Copyright 2006 The New York Times Company
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