US businesses hired at a tepid pace in September as the Washington battle over the budget and debt ceiling was headed toward a government shutdown, Labor Department data showed Tuesday.
Workers install a Ford EcoBoost engine into a 2014 F150 truck chassis on the assembly line at Ford's Dearborn truck plant on September 16, 2013 in Michigan
The economy generated a fewer-than-expected 148,000 jobs during the last month, just barely above the average for the third quarter, and well below the 195,000 monthly average in the first half of the year.
Of that only 126,000 jobs came from the private sector, expected to drive the recovery, while the expansion in hiring of teachers and other school officials at the state level, where layoffs were intense during the recession, made up much of the balance.
Analysts said the data -- released more than two weeks late due to the 16-day shutdown that ended last Thursday -- confirmed a lull in growth in the third quarter.
And most said that the decline in hiring numbers would likely continue through October and possibly November due to the fallout.
The White House took a strong line, saying the shutdown trimmed at least a quarter percentage point off the economic growth rate for the fourth quarter and predicting that more than a 100,000 possible jobs were lost by the shutdown.
"What we did in October was a self-inflicted wound that will subtract from jobs when we eventually learn the jobs number for October," Jason Furman, chairman of President Barack Obama's Council of Economic Advisers, told reporters at the White House.
"We're 120,000 fewer jobs than we otherwise would have had in the month of October.... that's just based on the data we have through October 12th. So as we look at more of October, those numbers could change and could potentially get worse."
Even if the impact is not that deep, analysts said the numbers likely point to the Federal Reserve keeping its stimulus program in place for the rest of the year.
"We would be astonished now if the Fed were able to taper this year; even March looks like a struggle," said Ian Shepherdson at Pantheon Macroeconomics.
September's hiring and a modest upward revision to the numbers from the previous two months nevertheless helped push the unemployment rate down a tenth-point notch to 7.2 percent, the lowest level since November 2008, just as the country was plunging into deep recession.
Although the rate was down from 7.8 percent a year ago, analysts said that a very low and unbudging rate of participation in the jobs market underpinned the gains.
With 11.25 million Americans still officially jobless, the data showed the employment-to-population ratio at 58.6 percent, where it has stayed for nearly two years, well below the 63 percent range of 2006-2007.
Likewise, the labor force participation rate remained at an historical low of 63.2 percent.
"This continues the pattern that we have seen throughout the recovery as the unemployment rate falls mainly because workers leave the labor market," said Dean Baker of the Center for Economic and Policy Research.
The private-sector job gains were strongest in transportation, construction, wholesale and retailing, and temporary help services.
There were some bright spots in the numbers. Government hiring expanded for the second straight month, with a net 22,000 new positions, mostly at the state and local level.
Hourly earnings continued to rise slowly, and were up 2.1 percent year on year. The number of those unemployed for more than 27 weeks fell, as did the number of those who said they were forced to take only part-time jobs.
The prospect raised by the data that the Fed probably will keep its bond-buying stimulus program unchanged through the rest of the year buoyed both stock and bond prices.
The S&P 500 ended the day up about 0.6 percent, and bond yields fell, the 10-year Treasury yield dropping to its lowest level in three months, 2.52 percent.
The dollar fell on the lower yields, with the euro jumping to $1.3783 at 1000 GMT, compared with $1.3677 just before the jobs data was released.
Latest stories in this category:
- UN troops killed as South Sudan civil war fears grow
- Google sees jump in government 'takedown' requests
- Omidyar-Greenwald news venture gets name, $50 mn
- Microsoft executive charged with insider trading
- Google fined for privacy 'violations'
- London theatre ceiling collapse injures 88
- Nobody can stop Assad from running again: Syria
- Theatre ceiling collapses, 88 wounded