Job growth is way short

Payrolls grew by 96,000 in September, far below 150,000 experts expected

Jobless rate holds at 5.4%

Tepid hiring numbers are blow to Bush campaign

October 09, 2004|By William Neikirk | William Neikirk,CHICAGO TRIBUNE

WASHINGTON - In a report with political significance, the Labor Department said yesterday that companies added 96,000 jobs to their payrolls last month, far short of the 150,000 increase that had been widely expected.

Economists called the modest rise disappointing and said the slower hiring pace was likely caused by corporate caution in view of higher energy prices, surging health care costs and concerns about terrorism.

A number of economists said the report might cause the Federal Reserve to rethink its plan to raise interest rates gradually.

The report also gave the Democratic presidential contender, Sen. John Kerry of Massachusetts, new ammunition to use against President Bush as the presidential campaign heads into the homestretch.

"The verdict is in," Kerry said. "With 1.6 million private-sector jobs lost during his term, President Bush will be the first president in 72 years to face the electorate with an economy that has lost jobs during his watch."

But 1.1 million government jobs have been created during Bush's presidency, partly offsetting the impact from the private-sector losses.

Stressing the positive side of the final jobs report before the Nov. 2 election, Treasury Secretary John W. Snow noted that the unemployment rate remained at 5.4 percent, which is low by historical standards.

He also argued that the report showed "a steady creation of jobs fueled by the pro-growth policies and strong economic leadership of President Bush."

Although economic growth appears to have picked up in recent weeks, employment once again appears to be lagging as companies seek to grow with better efficiencies, rather than hiring more people.

William G. Cheney, chief economist at MFC Global Investment Management in Boston, said he is concerned about the future labor market, because not enough jobs are being created to keep up with population growth.

It would take at least 150,000 new jobs a month to make a dent in the unemployment rate.

Cheney, the MFC Global economist, said creating 96,000 jobs "is a lot like a bloop single in the ninth inning with one out and the team down four runs. It may keep hope alive, but it won't win the game."

The Labor Department said the fact that four hurricanes struck the United States in August and September probably held down employment growth "but not enough to change materially" the jobs numbers.

Some economists said they suspected that employers would have added 40,000 more jobs if it weren't for the storms, but they stressed that this was only guesswork.

The Labor Department also issued a revised estimate saying 236,000 payroll jobs had been created in the 12 months between March 2003 and March 2004, an upward revision and a plus for the administration.

But Republicans had hoped that this newly re-estimated figure for payroll jobs, called "benchmarking," would have produced an even higher total and given Bush bragging rights over the economy heading into last night's presidential debate in St. Louis.

Snow said the economy has produced 1.9 million jobs over the past year. Democrats claim that 821,000 payroll jobs have been lost in Bush's term.

In fact, if the 236,000 revised estimate is counted - and economists said it should be - then 585,000 jobs have been lost since Bush assumed the presidency.

"A structural change is occurring in the labor market, partly because companies are scared of commitment, partly because of terrorism, oil prices and other uncertainties," said David Wyss, chief economist for Standard & Poor's.

The Chicago Tribune is a Tribune Publishing newspaper.

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