CBSN

September Surprise: 57,000 Jobs

Economy improves
AP / CBS
After seven months of losses, the U.S. economy finally added jobs in September, the Labor Department said Friday.

Nonfarm payrolls grew by 57,000, the first increase since January. Meanwhile, the unemployment rate stayed at 6.1 percent, with nearly 9 million Americans looking for work

The report was better than expected. Economists surveyed by CBS MarketWatch were forecasting a loss of 15,000 payroll jobs and expected the jobless rate to rise to 6.2 percent.

August's payroll loss was revised to 41,000 from 93,000. Counting August's revision, payrolls were 124,000 stronger over the past two months than expected.

President Bush welcomed the good news on the jobs front, and said his administration's efforts to spur a healthier economy were starting to take hold.

"One of the reasons I'm optimistic about the future of our economy is because of our entrepreneurial spirit," Mr. Bush told about 1,000 people in a convention hall in Milwaukee. "The tax relief plan puts more capital in the pockets of the small business owners, which means somebody is more likely to find a job."

"Things are getting better," the president said. "But there's still work to do."

The average workweek was steady at 33.7 hours in September while total hours worked in the economy were unchanged. Factory hours rose by 0.2 hours to 40.4 hours.

Average hourly wages fell 1 cent to $15.45, the first decline in wages since May 1989. Over the past year, hourly earnings are up 2.7 percent, the lowest rate in 17 months.

Job growth has been the missing piece in the recovering economy. From February to August, nearly 600,000 payroll jobs were lost, the longest losing streak during an expansion in modern U.S. history.

The Federal Reserve held its overnight lending rate steady at its last meeting, citing a "weakening" job market. Fed officials have hinted that they won't consider raising rates until they see solid, sustained job growth. Slack in the labor market is the chief deflationary force in the economy, they say.

While the job gain in September is encouraging, it's not strong enough to absorb new entrants into the labor force, much less reduce the long lines of Americans waiting for a job. The economy needs to create at least 150,000 jobs a month to keep pace with population growth.

It will take several quarters or more of strong growth to bring down the unemployment rate.

In September, job losses in manufacturing slowed, falling 29,000 compared with the average loss of 54,000 over the past year. Construction added 14,000 jobs.

Services added 74,000 jobs, including 66,000 in business and professional services, 10,000 in retail and 10,000 in finance.

Within professional services, 33,000 temporary help jobs were added, a key leading indicator for more permanent job growth. Health care added 15,000 jobs, below average growth in the sector.

The separate household survey, which has indicated a stronger labor market over the past year, weakened in September, showing an employment loss of 52,000 and an increase of 68,000 in unemployment.

The government also published a preliminary revision to its payroll count based on more complete information from state unemployment offices. Rather than increasing by several hundred thousand as expected, the benchmark revision will reduce payroll estimates by 145,000 or 0.1 percent for March 2003.