Unemployment stays at 9.1 percent; 103K hired

Job seekers wait in line to meet with employers at an outdoor job fair at the Crenshaw Christian Center in South Los Angeles August. 31, 2011.
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Updated at 9:53 a.m. ET

WASHINGTON - The United States added 103,000 jobs in September, a burst of hiring that followed a sluggish summer for the economy. The figure at least temporarily calms fears of a new recession that have hung over Wall Street and the nation for weeks.

The Labor Department also said Friday that the nation added more jobs than first estimated in July and August. The government's first reading had said the economy added zero jobs in August.

The unemployment rate stayed at 9.1 percent.

While the report was clearly better than feared, it also showed the economy is not gaining much momentum, said Tom Porcelli, chief U.S. economist at RBC Capital Markets.

"It moves you away from the ledge," he said.

Nearly half of the job gains last month came from the rehiring of 45,000 Verizon employees who had been on strike.

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Stock futures jumped after the report came out an hour before trading.

The unemployment report, one of the most closely watched economic indicators, showed that there are two ways of looking at the economy. On one hand, the news was encouraging for economists. Some of them had feared the nation would lose jobs, raising the risk of a devastating second recession.

But everyday Americans can't take much solace from that. Unemployment has been stuck at around 9 percent for more than two years. The economy has to add roughly 125,000 jobs a month just to keep up with population growth, more to bring down unemployment.

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The report included some signs that business activity is increasing. The temporary help industry added almost 20,000 jobs, and the length of the average workweek increased slightly. Wages also rose a bit.

More hiring and better pay could add up to more consumer spending. That accounts for 70 percent of the economy. When people spend more money, it generates demand for businesses, which hire more workers.

The private sector added 137,000 jobs, up from August but below July's revised total. The economy lost 34,000 government jobs. Local governments in particular cut teachers and other school employees.

Among the industries that added jobs in September were construction, retail, temporary help services and health care. Manufacturing cut jobs for a second straight month.

The economy returned in September to something closer to the job growth of earlier this year. In February, March and April, the nation added an average of more than 200,000 jobs a month.

But then manufacturing slowed, consumer confidence crashed, and Washington was caught in gridlock — first over whether to raise the nation's borrowing limit and then on how best to get the economy going.

Meanwhile, hiring slowed dramatically. The economy added only 53,000 jobs in May and 20,000 in June. The figures out Friday showed hiring improve in July, slowed slightly in August, and improved again in September.

Still, Federal Reserve Chairman Ben Bernanke warned Congress earlier this week that the economic recovery was "close to faltering," with slow job growth dragging down consumer confidence.

Bernanke, speaking in unusually blunt terms, said he could not blame Americans for being frustrated at the financial industry "for getting us into this mess" and at Washington for not coming up with a strong response.

President Obama, adopting a combative tone as he prepares for next year's re-election campaign, has challenged Congress to get behind his $447 billion jobs bill or risk being run out of Washington.

The Obama plan aims to jolt the economy but cutting taxes and increasing spending on schools, roads and other public projects. He has proposed paying for it in part by raising taxes on the wealthy and corporations.

On Thursday, Mr. Obama urged Congress to embrace his job-creation proposal, which he called an insurance plan against a return to recession. Mr. Obama said that without his nearly $450 billion package of tax cuts and public works spending, hiring and growth will be weaker. He said the bill could help prevent another downturn if Europe's debt crisis worsens.

Republicans have resisted Mr. Obama's plan, saying they oppose the higher taxes that he and other Democrats would use to pay for it.

Mr. Obama has increasingly cast himself in opposition to Congress, daring Republicans to vote against his package.

"Any senator who is thinking about voting against this jobs bill when it comes up for a vote," he said, "needs to explain why they would oppose something that we know would improve our economic situation at such an urgent time for our families and for our businesses."

Republicans have criticized the president's tactics as more of a campaign tool than a genuine attempt to seek compromise on job creation, with House Speaker John Boehner saying Mr. Obama had "given up on the country" and "decided to campaign full time instead of doing what the American people sent us all here to do and have to find common ground the deal with the big challenges that face our economy and our country."

Asked by CBS News' Bill Plante if his push for the bill is really about campaigning, Mr. Obama says he is "ready and willing" to negotiate with Republicans, but that they haven't shown serious interest in doing so.