US job creation weaker than expected

Payrolls climbed less than projected in September, indicating the US economy had little momentum leading up to the federal government shutdown. The jobless rate fell to an almost five-year low. The addition of 148,000 workers followed a revised 193,000 rise in August that was larger than initially estimated, Labor Department figures showed today in Washington.

Unemployment fell to 7.2 per cent, the lowest level since November 2008. The report, delayed by the 16-day shutdown that ended October 17th, was originally slated for October 4th. Progress in the labor market depends on how quickly the world’s largest economy can bounce back from the loss of business caused by the fiscal impasse.

“Hiring will remain modestly positive,” Jason Schenker, president of Prestige Economics in Austin, Texas, said before the report. “The unemployment rate will come down very gradually. The shutdown came at an inopportune time.”

The unemployment rate, derived from a separate Labor Department survey of households rather than employers, was forecast to hold at 7.3 per cent. The participation rate held at 63.2 per cent, matching the lowest since August 1978. The September payroll figure reflects the pay period that includes the 12th of the month, two weeks prior to the federal shutdown. Today’s report doesn’t include any late responses from employers, indicating the figures will be subject to revision as is typical each month. It will take some time to confirm or refute that the shutdown and political brinkmanship in Washington led to a sharp pullback in activity this month, so the data may be discounted, some economists said. “Since the economy is potentially in flux and the data for October and November are subject to an unusual degree of distortion. Fed policy makers are probably going to maintain stimulus for several more months, Stephen Stanley, chief economist at Pierpont Securities LLC in Stamford, Connecticut said.

Bloomberg