Job Losses in September Highest in a Decade
American employers cut more jobs in September than during any month in more than a decade, and that was based on surveys taken before the terrorist attacks on the World Trade Center and the Pentagon, the Labor Department said Friday.
Businesses reduced payrolls by 199,000, or nearly twice the consensus forecast of private economists. The reductions, coming atop a loss of 84,000 jobs in August, represented the largest monthly job decline since February 1991, in the midst of the last recession.
Despite the job losses, the national unemployment rate remained unchanged from August’s 4.9% in what Labor Department officials described as something of a statistical fluke. The rate has climbed a full percentage point from a three-decade low of 3.9% in September 2000.
Analysts said the August and September job losses almost certainly will be followed by several months of additional bad news as layoffs and dislocations stemming from the Sept. 11 attacks work their way into the national employment statistics.
“The data is going to get pretty ugly for a while,” said Joel L. Naroff, president of Naroff Economic Advisors in Holland, Pa.
“The fact we lost so many jobs and the losses were so widespread shows the economy is very weak,” said Lynn Reaser, chief economist with Banc of America Capital Management in St. Louis.
Nevertheless, most economists still believe that the employment costs of the emerging downturn will prove mild by historical standards, with the unemployment rate topping out at about 6%, far short of the 9%-plus average of postwar recessions.
The pain may be a little greater in California, where a new forecast predicts a loss of 285,000 more jobs to reach a jobless rate topping off at 6.7%. But that still would be far less damaging than the early-1990s recession.
“California won’t go as deep as it did last time and, instead of suffering more than the rest of the country, will be right about at the national average,” said Charles W. de Seve, president of American Economics Group, a Washington consulting firm.
Stocks reacted to the new employment report by falling, then rising. The Nasdaq composite index rose 7.99 points to gain 7.1% for the week. The Dow Jones industrial average gained 58.89 points for a weekly gain of 3.1%.
Analysts said traders bid stock prices back up from early losses after President Bush called on Congress to devote virtually all of a $60-billion-plus stimulus package to tax cuts rather than additional spending. The move seems likely to prompt opposition from congressional Democrats.
The jobless rate for blacks fell slightly, from 9.1% in August to 8.7% last month. The Latino rate rose from 6.3% to 6.4%. Labor Department officials dismissed the changes as statistically insignificant.
Officials said the new figures failed to measure the employment toll of the attacks because of a coincidence of timing and statistical technique.
The attacks occurred the week the Labor Department was conducting its survey of businesses for the employment total and households for the jobless rate. Under its counting methods, anyone working even an hour that week, including the day before the attacks, is considered to have been employed.
The September figures “are not reflective of the losses we suffered during the Sept. 11 attacks,” Labor Secretary Elaine Chao said. The attacks have sent a economic “shock wave” that will show up in the October employment numbers, she said.
Even without the attacks’ effects, the September figures painted a bleak picture of the economy, among other things raising doubts about recent hints the nation’s beleaguered manufacturing sector may be mending.
Manufacturers slashed payrolls by 93,000, extending to 14 months a run of factory job losses that has wiped out 1.1 million positions.
Almost as worrisome, according to analysts, was the loss of 41,000 service jobs. The service sector, which has been the primary source of job growth for several decades and accounts for about 80% of private sector employment, has posted no net gain of jobs since March.
Construction employment, which had been strong because of a home-building boom, shed 4,000 jobs, extending a weak streak of several months.
About the only employers to add jobs were those in the finance, insurance and real estate industries, where employment rose by 14,000. But the increase is likely to be erased in the October numbers because these businesses were among the hardest hit by the attacks.
The most immediate employment damage from the attacks appears to be in the aviation and travel industries. The nation’s six largest airlines have announced plans to lay off or fire almost 100,000 workers. In addition, Boeing Co., the biggest maker of commercial aircraft, has said it will fire 30,000, or 15% of its work force, over the next year.
The average hourly wage of production and nonsupervisory workers, who constitute more than 80% of the nation’s work force, increased 3 cents, or 0.2%, to $14.44 in September, according to the Labor Department. Over the last year, the figure has risen 4.3%.
The government has said the economy’s output increased only 0.3% in April through June. Most analysts predict that when figures for July through September are released at the end of this month, they will show the economy has slipped into decline.
