Employment picture improves

Leigh Strope

Friday, Oct. 3, 2003 | 9:34 a.m.

WASHINGTON -- The nation's unemployment rate held steady at 6.1 percent in September as businesses added to payrolls for the first time in eight months, suggesting a turnaround in the weak job market.

A survey of U.S. companies showed a net increase of 57,000 jobs last month in wide-ranging industries, the Labor Department reported today, and there was new hope for recovery in the slumping manufacturing sector. Some 29,000 factory jobs were lost, but that was considerably fewer than in previous months.

Economists had expected the overall civilian unemployment rate to rise to 6.2 percent, with a loss of 25,000 more jobs.

"This is potentially the key turning point," said Joel Naroff, president of Naroff Economic Advisors.

"It is really taking on the tone of a labor market that is finally getting over the hump. Indeed, this is what we need to create the confidence in both the household sector and the business sector that this recovery is real," Naroff added.

Job losses in August, initially reported at 93,000, were sharply revised to 41,000, a positive sign, he said.

People seeking work are not out of the woods yet, the latest report indicates. The number of jobless people looking for work for 27 weeks or more rose to 2.1 million last month. Also, people working part time because they can't find full-time work increased to nearly 5 million, the Bureau of Labor Statistics said.

The economy has improved in recent months, growing at a 3.3 percent rate in the second quarter of this year, with analysts predicting even more momentum in the current quarter, growing at a rate of 5 percent.

But those improvements had failed to trickle down to the jobs market, until now. Companies have feared taking on the increased cost of new workers, relying on their existing employees to do more. Economists think companies will wait to see steady profits before going on a hiring spree.

Amid signs of an economic rebound, the Federal Reserve last month decided to hold a key short-term interest rate at a 45-year low of 1 percent. Analysts think policy-makers will leave that rate unchanged again when they next meet, on Oct. 28.

The weak hiring outlook could mean trouble for President Bush's re-election next year. The 10 Democrats vying to challenge him have latched onto the economy as a campaign issue, criticizing the administration for tax cuts they say have benefited the wealthy and failed to improve the lives of ordinary Americans.

Bush is touting the job-creating power of small businesses as he looks to blunt news about an economy that is not generating enough jobs. He was meeting today with small business leaders in Milwaukee before giving a speech on the economy.

Bush was to renew a call for six steps that he has said would build confidence among employers and strengthen the economy, ranging from health care measures to a comprehensive energy plan, expanded trade and tax breaks.