Washington - US employers added far fewer workers than expected last month, suggesting a loss of momentum in the economy that supports the Federal Reserve’s decision to maintain its monthly bond purchases.
Non-farm payrolls increased 148 000 last month, the Labor Department said yesterday. While the job count for August was revised to show more positions created than previously reported, employment gains in July were the weakest since June last year.
But there was a silver lining in the report, with the unemployment rate falling a tenth of a percentage point to 7.2 percent, the lowest level since November 2008.
The jobless rate is derived from a separate survey of households, which showed an increase in employment last month.
The closely watched monthly employment report was released more than two weeks later than scheduled because of the partial shutdown of the federal government earlier this month.
The payrolls data signal that the economy lost steam even before the budget fight could rattle financial markets. Economists estimate the 16-day shutdown shaved as much as a 0.6 percentage point off annualised fourth-quarter gross domestic product, through reduced government output and damage to consumer and business confidence.
Policymakers at the Federal Reserve are expected to hold off any decision on scaling back the US central bank’s bond buying until the extent of the economic damage from the budget fight is clearer.
Fed officials will meet next week to discuss monetary policy. They surprised markets last month by sticking to the $85 billion (R834bn) a month bond-buying pace, saying they wanted to see more evidence of a strong recovery. Now, many economists think the Fed will hold off on scaling back economic stimulus until next year.
Economists fear that legislators will engage in another bruising round early next year when Congress must agree on a budget to fund the government and once again raise the nation’s borrowing limit.
The pattern of employment gains in September was mixed, with government payrolls increasing by 22 000 jobs after rising 32 000 in August.
The leisure and hospitality industry shed the most jobs since December 2009. There was a small bounce in information sector payrolls, which dropped in August as the motion picture industry shed workers.
Construction payrolls increased 20 000, which could ease fears of a levelling off in home building.
The manufacturing sector added only 2 000 jobs, while retail employment rose 20 800.
Other details of the employment report were mildly encouraging, with average hourly earnings increasing 3 US cents in September. – Reuters