Job growth sluggish in September
The US economy experienced another month of disappointing job growth in September, adding to the trend of lackluster hiring that has made this one of the weakest labor market recoveries in modern history.
The Labor Department said yesterday that payroll employment grew by just 96,000 jobs last month, far fewer than the 150,000 a month needed just to keep up with the natural growth of the work force. Since June, when the economy slowed under the weight of spiking energy costs and rising interest rates, hiring has averaged just over 100,000 jobs a month.
The four hurricanes that battered Florida and parts of the South over the past several weeks probably hurt job growth, too, economists said. The unemployment rate, 5.4 percent, was unchanged from August, but is down slightly from June's 5.6 percent rate.
"We have moderate economic expansion underway, but in no way are we in the best of all worlds," said Anthony Chan, senior economist at J.P. Morgan Fleming Asset Management in Columbus, Ohio. "If you're looking for a wage hike, it's not so good. If you're looking to find a job fast, it's not so good. If you're looking for job security, it's not so good, either."
Yesterday's report, the last before the November election, was also not so good for President George W. Bush, who is all but certain to become the first president since Herbert Hoover to end a term with a net job loss. Despite 13 consecutive months of employment growth, the nation still has 925,000 fewer jobs than when Bush took office in early 2001, shortly before employment hit its prerecession peak.
The weaker-than-expected jobs report also helped send stocks lower yesterday. The Dow Jones industrial average fell 70.20 to close at 10,055.20. The technology-heavy Nasdaq Composite index fell 28.55 to 1,919.97.
Strong job growth has been the missing ingredient of what has been an otherwise robust economic recovery, consistently defying economists predictions of a strong rebound. Save for a short-lived surge in the spring, job growth has been almost uniformly disappointing, resulting in one of the weakest labor market recoveries in modern history.
Since the official end of the recession in November 2001, the nation has gained only about 700,000 jobs, according to the Labor Department. In contrast, at similar points in the business cycle, the nation added nearly 4 million jobs from the end of the 1990-91 recession and more than 9 million from the end of the 1982 recession.
In part, jobs have not rebounded as strongly in the current recovery because they don't need to. The recent recession was far milder than downturns of the early '80s and '90s, when job losses were steeper and unemployment higher.
Still, economists said, other factors have made job growth painfully slow. First, businesses remain reluctant to hire in the face of political and economic uncertainties, including the instability in Iraq, soaring oil prices, the threat of terrorism, and the undecided presidential elections.
More fundamentally, economists said, businesses are responding to fierce and growing global competition by investing in technology to produce more goods and services with fewer employees. Even as job growth has lagged, business investment on equipment and software, also known as capital spending, has surged, growing at or near double-digit annual rates for more than year.
"Capital spending is going up very nicely, and that is why employment isn't," said Sung Won Sohn, chief economist at Wells Fargo Banks in Minneapolis. "Competition and productivity have been lifted to much higher levels, and they are probably going to stay there permanently."
While disappointing, economists said September's job growth was not weak enough to keep the Federal Reserve from raising interest rates. The Fed, to stay ahead of inflation, has raised rates by a quarter point in each of its past three meetings, and economist expect a fourth when policy makers meet in November, after the election. The benchmark now stands at 1.75 percent, up from June's 46-year low of 1 percent
The strength in corporate spending likely helped employment in professional and business services, which added 34,000 jobs in September, a good sign for Massachusetts, which has a high concentration of these firms. Other sectors important to the Massachusetts economy also posted job gains last month, including financial services, which added 26,000 jobs, and education and health services, with 8,000.
On the other hand, manufacturers cut for the first time in three months, shedding 18,000 jobs. The information sector, which includes software publishers and telecommunications firms, also shed jobs, losing 12,000 last month.
Meanwhile, consumer-related businesses still appear to be feeling the pinch as high gasoline and energy prices cut into consumers' purchasing power. Retailers, who earlier this week reported another month of lackluster sales, cut nearly 15,000 jobs in September.
Robert Gavin can be reached at rgavin@globe.com. 