Report: More Jobs, But More Unemployment

Payroll Rises In September, But Jobless Rate Still Rose 4.7 Percent

(CBS/AP)  Job creation picked up in September but not enough to stop the unemployment rate from rising to 4.7 percent, the highest in just over a year.

The new job market snapshot released by the Labor Department on Friday showed that employers boosted payrolls by 110,000, the most in one month since last May. In an encouraging note, the economy actually added 89,000 jobs in August. That marked an improvement from the net loss of 4,000 that the government first estimated.

The bump up in the unemployment rate from 4.6 percent in August came as hundreds of thousands of people streamed back into the labor market. That new rate of 4.7 percent was the highest since the summer of 2006.

Wages, meanwhile, rose solidly.

Altogether, the report suggests that although the job market has softened, it hasn't been hit nearly as hard by a credit crunch and a housing slump as thought was the case just a month ago.

To be sure, the ill effects of these problems are showing up at some companies. Construction firms cut 14,000 jobs in September, Factories slashed 18,000. Retailers got rid of just over 5,000 jobs. Financial services companies eliminated 14,000 slots.

However, gains in education and health services, professional services, leisure and hospitality, and in government work more than offset those losses, leading to a net gain in new jobs in September.

Ken Mayland, president of ClearView Economics, said the new employment report should allay fears that the economy may be heading for a recession.

The August report, which originally showed the first loss of jobs in four years, stoked fears that the economy was heading down that path. The revised payroll figure for August mostly reflected a big gain in government employment, especially in hiring teachers at local schools.

"There is still a certain amount of caution on the part of companies' human resources departments. The economy is still in slowdown mode and not fully back to health. But it is not in the intensive care unit," Mayland said.

The tally of new jobs was better than the 100,000 positions that economists were forecasting would be added to payrolls. They did correctly predict that the jobless rate would rise to 4.7 percent.

Still, the worst housing slump in 16 years and a jarring credit crunch have intensified uncertainty about the economy's outlook as well as companies' own financial positions.

To cushion the economy and bolster confidence, Federal Reserve Chairman Ben Bernanke and his colleagues last month sliced a key interest rate by one-half percentage point to 4.75 percent. It was the first rate cut in more than four years.

Policymakers hope the rate reduction will make businesses and people more inclined to spend and invest, which would help energize overall economic activity.

The latest report of employment conditions across the country comes as President Bush watches his approval-ratings tank. A record-low 34 percent approved of his handling of the economy in October, according to an Associated Press-Ipsos poll. Mr. Bush scheduled a statement on the latest jobs report from the White House later Friday morning.

Those with jobs saw gains last month.

Average hourly earnings rose to $17.57 in September, a 0.4 percent increase from August. Economists were forecasting a 0.3 percent increase. Over the past 12 months, wages are up 4.1 percent. That was the highest annual gain since February.

Wage growth supports consumer spending, a major contributor to national economic growth. A rapid and prolonged pickup in wages, however, can spur inflation concerns. On the other hand, if the job market were to falter, wage growth would be crimped. That would lessen people's appetite to spend, spelling trouble for the economy.

Economic growth, which clocked in at a brisk 3.8 percent pace in the spring, is believed to have slowed to a pace of around 2.4 percent or less in the just ended July-to-September quarter. Some believe that growth will be weaker in the final three months of this year.

The unemployment rate is expected to climb to close to 5 percent by the end of the year - but that's a figure that is relatively low by historical standards. During the deep recession of the early 1980s, for instance, the civilian unemployment rate topped 10 percent at several intervals.

A meltdown in the housing and mortgage markets this year has clobbered some homeowners, driving foreclosures to record-high levels. Lenders have been forced out of business. And, investors in mortgage-backed securities have taken huge losses. A spreading credit crunch took a turn for the worse in August, unhinging Wall Street. There have been some signs that the financial turmoil has calmed down, although the situation remains delicate.

Stocks rose sharply in early trading and bond prices tumbled Friday on the heels of the economic report.

In the first hour of trading, the Dow Jones industrial average rose 81.46, or 05.8 percent, to 14,055.77.

Broader stock indicators also rose. The Standard & Poor's 500 index rose 6.20, or 0.40 percent, to 1,549.04, and the Nasdaq composite index rose 21.28, or 0.78 percent, to 2,754.85.

Bond prices fell sharply as investors interpreted the jobs data as evidence against a rate cut. The yield on the 10-year Treasury note, which moves opposite its price, climbed to 4.62 percent from 4.53 percent late Thursday.

[hypnotoad72]

Note: Regarding ''stupid idea'', I''ve seen workers'' and customers'' reactions to changes in management and know the new decisions will only cause more problems. But no matter how much evidence is cited to back up how insane the new changes are, guess who doesn''t listen?

[hypnotoad72]

Offshoring, or ''offpeopling'' - workers made redundant by automation or idiot management who think their way is the only way; to the chagrin of employees who respond in chorus "That''s a stupid idea!"...

And it''s a shame Microsoft wants to ditch American workers; people who helped them make that company and its executives rich beyond the dreams of avarice. Given their current product quality (changing the size of a disk partition should not be registered as being NEW hardware in Vista, subject to their re-activation routine), but then the programmers of WGA wouldn''t want to do it right and kill off their, forgive me, cash cow. (Now Vista has some advantages too, but this is getting too much off the topic at hand.) And given the H1B workers don''t mind the work, and take the money back to their home country, of which even IT wages there are giving them their own wet dreams of richness, one has to wonder why Microsoft is abandoning America?

Also, if piracy is such a problem in Asia and India, how come Microsoft wants to reward them with jobs, special prices for their products, and opportunities? America''s piracy rate is 2/3rds less than India''s alone; never mind Asia''s. If Americans rampantly pirate, having noted Microsoft''s own apparent support of such countries that do, then will jobs come back here?

(Note - I don''t advocate nor condone piracy!!!)

[slim1h2o]

Unless you file for unemployment benefits, you are not counted for these numbers. Many people forced out of jobs, by importing of cheaper labor, have exhausted their unemployment benefits, and as such, don''''t/can''''t file again. That is why the unemployment rolls can seem to have ridiculously low numbers(statistically speaking).


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Posted by Klingon69 at 05:37 PM : Oct 05, 2007

Exactly, those that have exhausted their bennnys'' have to take lower paying jobs. So now they''re underemployeed. Me,, I just retired, now I don''t have to deal with it, directly.

[klingon69]

Some of you guys are referring to people out there unemployed without benefits, are you talking about illegals? How do you get 8-9% Slim1?
Posted by tcoleman12 at 01:21 PM : Oct 05, 2007

Unless you file for unemployment benefits, you are not counted for these numbers. Many people forced out of jobs, by importing of cheaper labor, have exhausted their unemployment benefits, and as such, don''t/can''t file again. That is why the unemployment rolls can seem to have ridiculously low numbers(statistically speaking).

[signof4]

Right after an election, especially if a democrat wins, we shall see stories on how things are improving and how happy Americans are.
Posted by sblake63 at 01:15 PM : Oct 05, 2007

I''ve noticed it...and you''re absolutely right! When the dems won their ''landslide upset victory'' in November, it''s as though the black and white TV picture slowly became color....like in The Wizard of Oz.

It is obvious to anyone with any intellectual honesty and half a brain the the LAMEstream media is BIASED to the left. In fact, it''s a PROVEN fact!

[signof4]

CBS/AP are such a bunch of bedwetting libs.
The top captions says, ''But Jobless Rate Still Rose 4.7 Percent''

In actual fact, it rose TO 4.7%. Still record low. Still considered by economists as FULL EMPLOYMENT!

BIASED, BIASED, BIASED, BIASED!!!!!!!

[slim1h2o]

How do you get 8-9% Slim1?


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Posted by tcoleman12 at 01:21 PM : Oct 05, 2007

I''m talking about the people that have exhausted their benefits that are still unemployed, thru no fault of their own. People, that were caught up in downsizing or outsourcing. I know a few myself, of course I''m talking about legal citizens. Like I said it''s about 8,9, or even higher.

[tcoleman12]

If hundreds of thousands were streaming into the workforce as the 4.7 number came in, wait to see how low it is next month. And watch to see how "surprised" and "stunned" all of the experts are at the numbers.
Some of you guys are referring to people out there unemployed without benefits, are you talking about illegals? How do you get 8-9% Slim1?

[sblake63]

Ever notice the left leaning media (Cbs, Msnbc etc.) seem to make sure the bad news gets a lot of press expecially when a republican is in power? I remember 92 all too well. Same old nonsense now. I dare and I do mean dare somebody who disagrees with me on this to keep a simple log on the number of stories related to the war, the economy etc between now and lets say 6 months after the election and track whether they they see any giving the current administration any credit for any positive trends.

Right after an election, especially if a democrat wins, we shall see stories on how things are improving and how happy Americans are.

[ne_patriot7]

Oooops... make that the month of August...