Saturday, October 4, 2003

Jobless numbers decline

By John Byczkowski
The Cincinnati Enquirer

The U.S. economy in September unexpectedly added jobs for the first time in eight months, raising hopes that the recovery won't be jobless much longer.

Companies added 57,000 jobs in September, exceeding economists' forecasts, the Labor Department reported Friday. That's a drop in the bucket for a work force of 130 million, but economists pointed out that the government also cut its estimate of August's job loss in half, giving new substance to views of an improving job market.

The unemployment rate held steady at 6.1 percent in September, unchanged from August. September figures for the Cincinnati market will be released Oct. 17.

"The missing link to the economic recovery has been job growth," said Lynn Reaser, chief economist for Banc of America Capital Management. "This is the first sign we may have begun to turn the corner."

All major stock market indices rose on the news Friday. Reaser said economists believe the economy grew strongly in the just-ended third quarter, but was losing some momentum. Durable goods orders fell in August, consumer confidence fell in September, and new jobless claims were stuck at 400,000 a week, a high level.

But that was before Friday's surprise. "The key to the sustainability of the recovery, once we lose some of the impetus caused by the tax cuts, would be the creation of new jobs," Reaser said. "That is why today's report was so very important and so very positive."

The job gains came in services and construction. Manufacturing, however, lost another 29,000 jobs in September - the 38th consecutive month of decline. The U.S. has lost nearly 2.8 million manufacturing jobs since August 2000.

That says the U.S. economy is still undergoing a structural change, said Anirvan Banerji, an economist at the Economic Cycle Research Institute in New York. He said economies worldwide undergoing such change can often grow without creating many new jobs.

There's little reason to expect job growth to catch up to GDP growth. Normally, expansions produce around 250,000 new jobs a month - not 57,000 - and "that's something that's nowhere on the horizon," he said. The institute's indicators suggest continued "modest" job growth.

That's not good news for Andrea Schild, a senior at Xavier University who came out to the Rock the Boat Career Fair downtown Thursday looking for work. She's majoring in finance and graduates in the spring, but banks and insurance companies are telling her there's nothing but entry-level jobs available right now.

"They're saying, 'hopefully, we're crossing our fingers that the economy will turn,' " she said. "They're telling me it should be better by the time I graduate,"

But they're making no promises. Her one-word assessment of the current job market: "Dismal."


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