Jobless rate dips to 5.6%
However, firms say 43,000 jobs lost in September
By Rex Nutting, CBS.MarketWatch.com
Last Update: 9:10 AM ET Oct 4, 2002
WASHINGTON (CBS.MW) - The U.S. unemployment rate fell unexpectedly to 5.6 percent in September, the lowest since February. But other indicators of the health of the labor market were more discouraging.
A survey of businesses showed 43,000 fewer jobs in September, while a separate survey of households estimated that 711,000 more Americans were working in September than in August, the Labor Department said Friday. The number of unemployed workers fell 50,000 to 8.1 million. Read the full report.
The unemployment rate is derived from the household survey.
Economists were expecting the jobless rate to rise from 5.7 percent in August to 5.9 percent with a meager 13,000 net new jobs, according to a survey conducted by CBS.MarketWatch.com. See Economic Calendar.
The drop in job growth will add to the concern at the Federal Reserve that the recovery is weakening. However, the dip in the unemployment rate should take some of the heat off the Federal Open Market Committee to cut rates immediately.
"This makes no sense," said Ian Shepherdson, chief economist of High Frequency Economics, of the large gain in household employment. "But it gets the Fed off the hook; no intermeeting ease."
Stock futures soared on the report, with many traders braced for much larger job losses. The drop in the jobless rate was icing. Bonds fell as money flowed to stocks.
The FOMC meets again on Nov. 6, after the October jobs report is released.
The establishment and household surveys have diverged in recent months, with the household survey in particular showing wide swings in employment. Economists put more credence in the establishment survey of about 300,000 places of business covering about a fourth of all workers than they do in the survey of 60,000 households.
August's job growth was revised to 107,000 from 39,000. In the past five months, the economy has added 174,000 jobs after losing 1.8 million in the previous 13 months.
Total hours worked in the economy rose 0.4 percent to the highest level in a year. Average hourly earnings rose 0.3 percent or 5 cents to $14.87. Wages are up 3 percent in the past year.
September's job losses were concentrated in manufacturing, where 35,000 positions were eliminated. In the past two months, manufacturers have cut about 100,000 jobs after cutting just 80,000 in the prior four months. Most of September's cuts were in durable goods production, including electrical equipment, transportation and machinery.
Just 40.4 percent of 136 manufacturing industries added jobs in September. The manufacturing workweek was unchanged at 40.9 hours, although overtime fell by six minutes.
Service industries, where four-fifths of the jobs are, lost 5,000 jobs. It was the first decline in services since February. Retail establishments cut 16,000 jobs, bringing the losses in the past five months to 66,000.
Transportation and utilities employment fell by 32,000, with 17,000 lost in trucking thanks to Consolidated Freightways' bankruptcy. Air transportation lost 12,000 jobs.
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Rex Nutting is Washington bureau chief of CBS.MarketWatch.com. |
