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October 5, 2007
The national unemployment rate rose to its highest level in 13 months in September, but the economy added jobs, easing jitters that the economy is heading toward recession.
The unemployment rate rose to 4.7 percent from 4.6 percent in August. At the same time, job creation grew, as employer payrolls showed a net gain of 110,000 jobs, according to the U.S. Bureau of Labor Statistics.
The bureau on Friday also revised its August payroll estimates to show a gain of 89,000 jobs rather than a net loss of 4,000 reported last month.
The September jobs report was in line with most economists’ expectations. Part of the increase in the jobless rate was due to about 573,000 workers entering the job market, a traditional increase after the summer months.
The monthly employment reports also showed a gain of 7 cents an hour in average hourly earnings of production and nonsupervisory workers on private, nonfarm payrolls.
Average weekly earnings stood at $593.87 in September.
Over the year, both average hourly and average weekly earnings rose by 4.1 percent, the bureau said.
On Wall Street, the employment reports helped push the Dow Jones industrial average up 91.70 points, closing at 14066.01 after hitting a high of 14,124.54 earlier in the day.
Analysts said the September figures indicated that the national economy appeared to be weathering the housing and credit industry slumps despite job cuts in the construction, manufacturing and financial service sectors. Those losses were countered by back-to-school job gains in education, as well as job growth in health services and the government sector in general.
Dean Baker, co-director of the Center for Economic Policy and Research, noted that the education and health services sector and the accommodations and food services sector basically “have accounted for all the private-sector job growth over the last three months.” Most other sectors in the payroll survey showed weak growth or declines, Baker said. Manufacturing, for example, has lost 63,000 jobs in the last two months.
In general, job creation “has been on a slowing trend over the past year,” said Steven Wood of Insight Economics. “Job creation accelerated in September and has averaged 90,000 per month over the past four months. However, this is less than half of its 2006 pace.”
Outplacement consultant John Challenger predicted that the upcoming holiday season would be “the first big test as to whether the housing slump is taking a toll on consumers, but for now, the job market indicators suggest that the troubles are not spreading to other areas of the economy.”
Jill Jenkins, chief economist at the Employment Policies Institute, noted that the biggest jobless increases occurred in September among the least-educated workers. High school dropouts had a 10 percent increase in their unemployment rate from August.
Ken Mayland, president of ClearView Economics, said the September reports should minimize concerns about a pending recession.
“There is still a certain amount of caution on the part of companies’ human resources departments,” Mayland said. “The economy is still in slowdown mode and not fully back to health. But it is not in the intensive care unit.”
The Star’s wire services contributed to this report.
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