By Timothy R. Homan – Oct 8, 2010

The U.S. lost more jobs than forecast in September, reflecting a decline
in government payrolls that shows the damage being done by rising fiscal
deficits.

Employers cut staffing by 95,000 workers after a revised 57,000 decrease
in August, Labor Department figures in Washington showed today. The
median estimate of economists surveyed by Bloomberg News called for a
5,000 drop. The unemployment rate
unexpectedly
held at 9.6 percent.

Private payrolls that exclude government agencies climbed 64,000, less
than forecast, underscoring the concern expressed by some Federal
Reserve policy makers that the rebound from the worst recession since
the 1930s has been too slow and may require easier monetary policy.
Economists surveyed by Bloomberg project unemployment will average at
least 9 percent through 2011, which may restrain consumer spending, the
biggest part of the economy.

“The pace of this employment rebound has been quite sluggish,” Steven
Wood, president of Insight Economics LLC in Danville, California, said
before the report. “Employers are still very cautious about hiring.”

Projections of 83 economists for the unemployment rate ranged from 9.6
percent to 9.8 percent after the 9.6 percent rate reported in August.
Estimates for private payrolls ranged from no change to an increase of
110,000.

The Labor Department today also published its preliminary estimate for
the annual benchmark revisions to payrolls that will be issued in
February. They showed the economy may have lost an additional 366,000
jobs in the 12 months ended March 2010. The data currently show a 1.7
million drop in employment during that time.

Longest Since 1948

The jobless rate has equaled or exceeded 9.5 percent for 14 consecutive
months, surpassing the 13-month period from mid 1982 to mid 1983 as the
longest span of elevated joblessness since monthly records began in
1948.

The decrease in overall payrolls reflected a 77,000 decline of temporary
workers hired by the government to conduct the decennial population
count and a 49,800 drop in teaching jobs at the local government level.

The unwinding of census employment has distorted the payroll figures for
months as the government dismissed workers as the count winds down. For
that reason, economists say private payrolls, which exclude government
jobs, are a better gauge of the state of the labor market. Only about
6,000 census workers remain on the payrolls, indicating September may be
the last month the jobs data will be distorted.

Manufacturing payrolls decreased by 6,000 after declining 28,000 a month
earlier. Economists projected a 2,000 increase for September.

Service Jobs

Employment at service-providers decreased 73,000. Construction companies
subtracted 21,000 workers and retailers hired 5,700 workers.

Average hourly earnings were little changed at $19.10, today’s report
showed.

Government payrolls decreased by 159,000. State and local governments
reduced employment by 83,000, while the federal government lost 76,000
jobs.

The average work week for all workers held at 34.2 hours.

The so-called underemployment rate — which includes part- time workers
who’d prefer a full-time position and people who want work but have
given up looking — increased to 17.1 percent from 16.7 percent.

The number of temporary workers increased to 16,900 after adding 17,700
in August. Payrolls at temporary-help agencies often slows as companies
seeing a steady increase in demand take on permanent staff.

Economic Growth

The economy grew at a 1.7 percent annual pace in the second quarter
after expanding at a 3.7 percent rate in the first three months of the
year and 5 percent at the end of 2009, according to the Commerce
Department.

Fed policy makers are debating how to deploy tools for more
unconventional easing as some officials indicated action may be needed
to lower unemployment.

“Further action is likely to be warranted unless the economic outlook
evolves in a way that makes me more confident that we will see better
outcomes for both employment and inflation before too long,” New York
Fed president William Dudley said in an Oct. 1 speech, a day after Fed
Chairman Ben S. Bernanke said in a statement that the central bank has a
duty to aid the economy.

The Standard & Poor’s 500 Index surged 8.7 percent last month, making it
the biggest September gain since 1939, amid speculation the world’s
largest economy will avoid slipping back into recession and bets that
the Fed will buy more debt to support the recovery.

Obama Policies

Voters are increasingly skeptical of the Obama administration’s economic
policies heading into November elections that will determine which
political party leads Congress. Obama’s job approval over a three-day
period that ended Oct. 5 was 43 percent, compared

with 53 percent at the same time last year, according to a poll from
Princeton, New Jersey-based Gallup Inc.

While some companies are still firing employees, others are recalling
workers. American Airlines, the third largest U.S. airline, plans to
recall 545 flight attendants and 250 pilots to meet demand for
international flights as it begins it begins an alliance with British
Airways Plc and Spain’s Iberia.

Patrick Wynn

Assistant Vice President

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A division of NewBridge Bank

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Assistant Vice President