Jobs Report Shows Weak Oct.
In a miscue that echoed through the financial world Thursday, government officials released October jobs data on the Internet a day ahead of schedule, revealing a disappointing gain of 116,000 jobs and a U.S. unemployment rate holding steady at 4.6%.
The premature disclosure quickly pushed interest rates and stock prices down, but not for long. Soon afterward, Federal Reserve Board Chairman Alan Greenspan told a Florida audience that “we are already seeing significant signs” of improvement within the shaken global financial system.
Greenspan’s remarks, along with a bullish report on October retail sales, triggered a reversal of sentiment and the U.S. stock market rocketed as the bond market stabilized. The Dow Jones industrial average gained 132.33 points to close at 8,915.47, its loftiest perch since late July.
Analysts also interpreted the October job numbers as increasing the likelihood that the Federal Reserve would reduce interest rates, either at the Nov. 17 meeting of its Policy Committee or shortly afterward, in its campaign to prevent the economy from slipping into recession.
“The economy is not falling apart by any means,” said Joel L. Naroff, senior vice president and chief bank economist at First Union Corp. in Philadelphia. “That’s really the key to this [jobs] report.”
At the same time, the gain of 116,000 payroll jobs was significantly weaker than the 180,000 increase that had been widely forecast. “The market said it really isn’t that bad, but if the Fed is going to ease, that’s good for us,” Naroff added.
The jobs report illustrated the ongoing problems suffered by U.S. manufacturers amid Asia’s financial debacle. Manufacturing employment declined by 52,000 jobs, the seventh decline in nine months. Retail employment reportedly fell by 10,000 jobs, although some analysts questioned the accuracy of that finding. A principal winner was business services, where payroll jobs increased by 58,000 last month.
Also Thursday, Department of Labor officials said the economy had gained many more jobs in September than previously thought. The September increase was revised upward to 157,000 from an earlier estimate of a meager 69,000.
Though the unemployment rate remains low by historical standards, it is up significantly from the 4.3% low point reached last spring.
“Job growth is softening,” said economist Oscar Gonzalez of John Hancock in Boston. But, he said, “considering that we are carrying the global economy on our shoulders, we are still running pretty fast.”
For his part, Greenspan offered a non-alarmist assessment of the global financial situation. In a speech to investors in Boca Raton, Fla., he suggested that the climate had improved somewhat from the chaotic fears that shook the financial world following Russia’s botched devaluation of the ruble in August and signs that the panic would leap to Latin America.
“It is of course plausible that the current episode of investor fright will dissipate,” he said. “Indeed, we are already seeing significant signs of some reversals.”
But Greenspan, making clear that he did not consider the crisis over, added that America and other wealthy nations faced an unfinished job of helping weaker economies survive.
“Until the current crisis is resolved, transition support by the international financial community to emerging market economies in difficulty will doubtless be required,” he said.
If Greenspan’s remarks were comforting to some, the miscue by the Bureau of Labor Statistics had the opposite effect. On a chart at the BLS Web site, employees prematurely posted the October jobs information that had been scheduled for release today as part of the October unemployment report.
Enterprising Web surfers stumbled onto the chart early Thursday morning, alerted by a flag emblem marked “new.”
“He clicked on it, expecting it to say September, and it said October,” said Jennifer Rossum, an analyst at Stone & McCarthy Research Associates, of economist Raymond W. Stone.
Stone called BLS in a futile bid to reach an official, she recalled. “He told them that if he didn’t hear back from them he would release it to our clients--and he did. It took them several hours to get back to us.”
Among the subculture of intensely interested investors and financial professionals--accustomed to a world of rumor and hearsay--the early appearance of a highly coveted piece of economic news prompted a frenzy.
“Once it got out, the faxes were going all over the place. Every news group that could post it posted it immediately, and the market reacted very sharply,” Naroff said. Some estimates held that the initial word pushed the Dow Jones average down about 60 points.
Chagrined government officials declined to name a culprit and said they were reviewing the matter.
“I am sure it was a mistake and not anything that was deliberate,” Katherine Abraham, the BLS commissioner, told reporters.
In a statement, Labor Secretary Alexis Herman said the department was uncertain how the proprietary information leaked into the public domain. “We do have strict rules on the release of this data and have begun a review to determine what went wrong,” she said.
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U.S. Unemployment
Percentage of U.S. work force not employed, seasonally adjusted:
October, 1998: 4.6%
Source: Department of Labor
