Unemployment Stuck at 9.1 Percent in September;103,000 New Jobs Added
Labor Department announces 103,000 jobs added in September.
Oct. 7, 2011 — -- The nation's long jobs drought continued in September, with unemployment staying at 9.1 percent as the economy added a better-than-expected 103,000 non-farm jobs, the Labor Department announced Friday.
Unemployment has remained persistent since declining from a high of 10.1 percent in October 2009. While there was improvement during 2010, it has flatlined this year.
"The rate has remained at around 9 percent for quite some time. The rate of job creation has been especially weak in this quarter," said Steven Leslie, lead analyst for financial services at the Economist Intelligence Unit.
The stock market opened marginallly higher after the jobs announcement and stayed relatively flat. The Dow Jones industrial average fell 15 points to 11,108 by mid-day and the broader S&P 500 and the tech-heavy Nasdaq showed slight declines.
Leslie had expected 50,000 net jobs created in September while the consensus among economists surveyed by Bloomberg News was about 55,000. The Wall Street Journal today said the expectation was for 100,000 new jobs. Economists expected the unemployment rate to stay stead at 9.1 percent. August's figures were revised to 57,000 new jobs from zero.
Leslie said it was "no surprise" the government continues to slim down, losing 34,000 jobs.
"So it's private employers who are taking on a modest number of new workers," Leslie said.
Surprisingly, the construction industry added 26,000 jobs, after a long slump.
"This is just one data point and it's too early to say the industry's troubles are easing," he said.
The economy must create about 200,000 jobs to start to absorb unemployment, according to Leslie.
Two to three million U.S. jobs could be created in the next five years as "Made in America" manufacturing becomes more economical in the country, according to a study by the Boston Consulting Group this week.
The report showed the average work week increased six minutes to 34.3 hours and the average hourly wage increased 0.2 percent to $23.12.
Leslie said there are "too many policy variables" to forecast when unemployment will start to decrease, given uncertainty around President Obama's American Jobs Act, which includes a payroll tax extension, an unemployment insurance extension past 99 weeks, employer hiring tax incentives and infrastructure proposals.
Leslie said it was important to note that August's unemployment figures were also weak due to the 45,000 Verizon workers who were on strike, most of whom have returned to work.
"Some of the apparent improvement in the figure will be a bit of an anomaly, so you shouldn't read too much into it," Leslie said.
Weekly jobless claims rose 6,000 to 401,000 for the week that ended Oct. 1, the Labor Department announced on Thursday. The figure was slightly better than the consensus 410,000 most economists had expected, though Leslie said the difference was virtually in the margin of error.
In positive news on the topic of labor, the monthly ADP report showed private employers added 91,000 jobs in September, which was better than the consensus forecast of about 75,000. The report also showed improvement from the previous month, when employers added 89,000 jobs.
Leslie said he does not predict another recession, though he does see slow GDP growth, which is now shows a weak 1.3 percent annual growth rate.
Peter Hooper, managing director and chief economist of Deutsche Bank Securities Inc., said September's 103,000 new jobs were stronger than expected but reflects an economy that is "still growing sluggishly."
"Ongoing adjustment to the housing bubble as well as, now, growing uncertainty about economic policy at home to deal with the US fiscal crisis and in Europe to deal with the euro crisis continue to weigh on confidence, financial markets, and the economy more generally," Hooper said. "Decisive action to deal with longer-term the US federal debt problems via entitlement reform and tax reform, as well as decisive action in the euro area to recapitalize financial institutions and implement structural reforms and fiscal reforms would do much to turn around the financial markets, the economy, and the job situation in the U.S."
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