Unemployment held steady at 9.1 percent as the economy added 103,000 jobs in September, beating economists’ expectations but remaining below the level they say is needed to dent unemployment.
Economists had expected nonfarm payrolls to show 60,000 new jobs in September and the unemployment rate to remain at 9.1 percent.
The return of about 45,000 Verizon employees from a two-week strike in August, which the Labor Department said was reflected in the September figures, further bolstered hopes for a stronger jobs report. The dismal August employment report, which initially found that no net new jobs were added, was revised upward to 57,000.
But it takes about 125,000 new jobs per month to keep the unemployment rate steady. To bring the rate down a percentage point over a year, it would take around 200,000 additional jobs per month.
The White House touted the better-than-expected numbers but painted the elevated unemployment rate as an additional impetus for lawmakers to pass the president’s $447 billion jobs bill. “Today’s report underscores the president’s call for Congress to pass the American Jobs Act,” Katharine Abraham, a member of the White House Council of Economic Advisers, said in a statement.
Economists were divided over whether the report pointed to a stalled economy’s turnaround, or served as a bleak harbinger of what will happen if lawmakers fail to act.
Adam Hersh, an economist at the liberal Center for American Progress, cautioned that a "103,000 jobs added" headline would be misleading. If you take out the 45,000 workers returning from the Verizon strike, the report indicates tepid, horizontal growth, he said.
Lawmakers should embrace short-run fiscal demand policies to boost job growth through public investments, infrastructure, and renewable energy, Hersh added.
Sophia Koropeckyj, managing director of Moody’s Analytics, said that the decisions of the Joint Select Committee on Deficit Reduction, the so-called super committee, could also have a sizeable impact on labor markets. Cuts to areas such as defense spending will affect payroll employment in those sectors. September’s jobs report indicates that the recovery is “intact, but it is very slow, frustratingly slow,” Koropeckyj said, and lawmakers' actions could threaten the frail recovery.
Other economists say the numbers don’t paint such a depressing picture.
Carl Riccadonna, senior U.S. economist at Deutsche Bank, said the numbers show the labor market is still chugging forward, despite its lackluster pace. In fact, given the declines in the equity markets and all of the economic uncertainty, the decent jobs numbers are a testament to the economy’s resilience.
The economy is “lean, lean, lean across the board, and that makes it harder to tip into recession,” Riccadonna said.
He doesn’t have much hope for Obama’s jobs bill bringing down the unemployment rate. Private-sector developments will play a much more important role in boosting the recovery, he said.
The key is household income. The best part of Friday’s report isn’t the 103,000 increase in nonfarm payrolls—it’s the 0.2 percent increase in average hourly earnings and the average length of the work week climbing by 0.1 hour. “That’s huge,” Riccadonna said. The roughly six-minute increase in the work week is the equivalent of about 250,000 to 300,000 additional jobs. “In terms of aggregate income, or total income created, this employment report is a lot stronger than that 103,000 headline would suggest,” he said.
But in the end, monthly employment and unemployment numbers are volatile and frequently revised. In the meantime, economists will be seeking clues for how lawmakers might boost the weak jobs market in a preliminary vote in Congress on the American Jobs Act next Tuesday.
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