Payrolls Grow, But Miss Target

The Labor Department said Friday that employers' payrolls increased by 96,000 overall in September while the unemployment rate held steady at 5.4 percent, painting a picture of slow job growth upon which presidential campaigns will seize.

The 96,000 figure was short of the 138,000 new jobs that economists had been expecting. The unemployment rate had been expected to hold steady.

September's net increase of payroll jobs was less than August's rise, which was revised down in Friday's report from 144,000 to 128,000.

The four hurricanes striking Florida and other coastal states the past two months "appears to have held down employment growth, but not enough to change materially," the Labor Department said.

Job growth was held down by losses in manufacturing, retail and information services.

The jobs report was likely to become fodder for President Bush and Sen. John Kerry, who meet Friday in a debate rematch. Even though voters cite Iraq as a major concern, the economy consistently ranks at the top.

Mr. Bush will cast the numbers as proof that his tax cuts are bolstering the jobs market, and thus the economy. Kerry is likely to maintain his focus on the sizable net jobs loss under Mr. Bush's watch — the first such loss under a U.S. president since Herbert Hoover.

Though 1.8 million jobs have been added to the payrolls of U.S. businesses since August 2003, there are about 800,000 fewer jobs overall than when Mr. Bush took office in January 2001.

Neil Liebovits, president and chief operating office of Ajilon Professional Staffing in Saddlebrook, N.J., tells CBS Radio News that his clients "just want a place where they can hang their hats for the next couple of years without worrying about downsizing."

"Certainly we don't have nearly enough jobs as there are applicants," he said.

The slower-than-expected job growth is one of several signs that the economic rebound has lost some steam over the summer.

The government reported on Thursday that new filings for unemployment decreased sharply last week by 37,000 to 335,000.

But consumer confidence dropped last month to its lowest levels since midsummer amid worries about high energy prices, uncertainty about the labor market and anxiety about making major purchases like a car or a home.

The AP-Ipsos consumer confidence index slipped to 97.4 in September from 103.4 in August, the latest measure of consumer attitudes in recent weeks to reflect uneasiness over the economy. The consumer confidence index is benchmarked to a 100 reading on January 2002, the month the index was started by Ipsos.

In a report last week, the Commerce Department said consumer spending was flat in August. The department also revised the July figure upwards from 0.8 to 1.1. percent.

Many economists say consumers are tapped out on spending for now, and that business investments will be counted on to charge the economy, which grew at a 3.3 percent annual rate in the second quarter.

That was better than an earlier estimate putting the growth rate at 2.8 percent, but still marked a significant drop from the 4.5 percent pace of the first quarter. Economists expect the growth rate of the gross domestic product to approach 4 percent in the current third quarter.

Gas prices might be squeezing spending. The price of crude oil topped the $53-per-barrel mark this week.

Federal Reserve Chairman Alan Greenspan has said there was an early summer slowdown of the economy, which he has called a "soft patch," but predicts the economy will rebound. The Fed raised interest rates last week for the third time since June. But some private economists worry his forecast might be overly optimistic given a renewed surge in energy costs.

Hurricane Charley, which hit Florida in the middle of the month, affected incomes in several ways, the Bureau of Economic Analysis said. Rental income was reduced by about $11 billion while insurance payments added $12.5 billion.

While employment was affected at companies unable to operate in the aftermath of the storms, other employers added jobs, the Labor Department said on Friday.

The jobs report showed much of the growth last month occurred in government hiring, which resulted in 37,000 net new jobs. Hiring in the service sector continued to rise in such industries as professional and business services, which added 34,000 jobs overall; financial services, which added 26,000 jobs; and the leisure and hospitality category, which expanded hiring by 13,000.

The troubled manufacturing sector shed 18,000 jobs, the first decline in two months. However, the nation's factories have boosted hiring by 88,000 jobs in the previous seven months. Construction employment grew by 4,000. The sector has showed little growth since May.