Jobs Growth of 96,000 Weaker Than Expected

Employers added far fewer jobs than expected in September as manufacturers cut positions and others companies remained cautious about adding workers amid economic and political uncertainty, according to a government report today.

The disappointing Labor Department report, the last before the presidential election, quickly became a political football as President Bush and Democratic rival Sen. John F. Kerry prepared for tonight’s debate.

Democrats wasted no time reminding voters that Bush will become the first president since Herbert Hoover to see a net job loss during his four-year term. Republicans countered by focusing on the benefits of White House-sponsored tax cuts and an economy that has continued to expand — albeit at a slower rate than most would like.

The September results represented “good progress” on the employment front, said White House Treasury Secretary John Snow.

During September, the nation’s employers added 96,000 non-farm jobs due to “modest job gains” in service industries, according to the Labor Department’s payroll survey.

In a separate report, the U.S. unemployment rate held steady at 5.4% from August as an estimated 8 million Americans remained jobless.

The payroll gain fell far short of the estimated 150,000 jobs many economic analysts had been forecasting.

Labor Department officials said that employment growth might have been “held down” by the string of hurricanes that hit Florida and the Southeast, “but not enough to change materially the bureau’s assessment of the employment situation in September.”

Many economists, who have been lowering their employment growth targets, said the weaker than expected results in part might reflect growing uncertainty and caution in the wake of spiking oil prices, continued violence in Iraq and the presidential election.

“Uncertainties are causing some businesses to sit on the sidelines,” said Wells Fargo economist Sung Won Sohn in a statement. “The key to future economic and job growth will be a reduced level of aversion.”

Signs of a weak job market and a slower growing economy raised questions about the Federal Reserve move to raise interest rates from historic lows. While few expect Fed policymakers to stop raising rates, the lackluster employment market might make the central bank more cautious about the number and size of future rate hikes, analysts said.

“This report will heighten the ongoing debate about the pace of Fed tightening, clearly giving more ammunition to those who expect a pause either in November or December,” said economist Joshua Shapiro at the consulting firm MFR.

Payroll growth in September came primarily from employers in financial activities, professional and technical services, and temporary help services. Payrolls also grew in insurance and real estate. The numbers held steady in the healthcare and construction sectors.

However, job gains were tempered by losses in telecommunications and the manufacturing sector, which lost 18,000 positions after two months of gains.

The average workweek for nonsupervisory workers remained unchanged in September at 33.8 hours. Meanwhile, average weekly earnings increased 0.2% to $533.36.

The disappointing September jobs report and a slowdown in job growth from the beginning of the year were held up by Democrats as signs of the White House’s failed economic policies.

“Even over this last year, our economy has failed to create even enough jobs to cover new workers coming into the job market, not to speak of the millions who are unemployed, working in part-time or temporary jobs, or who have given up and dropped out,” Kerry said in a statement.

Meanwhile, the Bush campaign unveiled a new ad that touted the 2 million jobs created during his administration.

However, based on the most recent employment figures, the job gains during the Bush White House have been overwhelmed by job losses. The result, according to the most recent estimates, is that the nation’s payrolls dropped by a net 585,000 during Bush’s term in office.

The loss had been wider, but the Labor Department today increased its estimate for the number of jobs created between March 2003 and March 2004 by 236,000.

Bloomberg News contributed to this report.