Hiring improves in September as nation adds 103,000 jobs, but it will take more to end crisis



WASHINGTON (AP) -- The jobs crisis isn’t getting worse. But it isn’t getting much better, either.

The economy added just enough jobs last month to ease fears of a new recession. But hiring is still too weak to bring down unemployment, which has been stuck at about 9 percent for more than two years.

The nation added 103,000 jobs in September, an improvement from the month before, the Labor Department said Friday. But the total includes 45,000 Verizon workers who were rehired after going on strike and were counted as job gains.

Even counting those workers, the job gains weren’t enough to get the economy going. It takes about 125,000 jobs a month just to keep up with population growth. For September, the unemployment rate stayed stuck at 9.1 percent.

“Well, the sky is not falling just yet,” Joel Naroff, chief economist at Naroff Economic Advisors, said in a note to clients. But there was nothing great about the report, he added. “It’s incredible how low our sights have been set.”

On one hand, the unemployment report was encouraging for economists. Some of them had feared the nation would lose jobs in September, raising the risk of a painful second recession.

But everyday Americans can’t take much solace from it, either. The Great Recession has been over for almost two and a half years, and while corporate profits and the stock market have bounced back in that time, unemployment is still high.

There are 14 million people counted as unemployed in the United States. An additional 9.3 million are working part time and would rather work full time. And 2.5 million more have simply given up looking for a job.

The Labor Department said the economy added more jobs than first estimated in July and August. The government’s first reading had said the economy added zero jobs in August.

While the report was clearly better than feared, it also showed the economy is not gaining much momentum, said Tom Porcelli, chief U.S. economist at RBC Capital Markets.

“It moves you away from the ledge,” he said.

It was also discouraging news for President Barack Obama, who will almost certainly have to wage his 2012 campaign under the highest unemployment of any president running for re-election since World War II.

Gene Sperling, a White House economic adviser, said the administration was “slightly comforted” that the jobs figure came in better than expected. But he said it was not good enough.

Obama, adopting a combative tone as he waits for the Republicans to settle on a nominee to oppose him, has challenged Congress to get behind his $447 billion jobs bill or risk being run out of Washington.

The Obama plan aims to jolt the economy by cutting taxes and increasing spending on schools, roads and other public projects. He has proposed paying for it in part by raising taxes on the wealthy and corporations.

Obama’s Republican rivals are trying to persuade voters that he is to blame for high unemployment and the sluggish economy. Former Massachusetts Gov. Mitt Romney told Fox News Channel on Friday that Obama is criticizing Congress simply because he is “looking for someone to blame.”

The report initially sent the stock market higher. Stock prices later fell after a credit rating agency downgraded Italy and Spain, adding to concern about Europe’s debt crisis. The Dow Jones industrial average was flat in afternoon trading.

The figures offered some evidence that business activity is increasing. The temporary help industry added almost 20,000 jobs. And the average workweek lengthened slightly. Wages also rose a bit.

More hiring and better pay could boost consumer spending, which drives about 70 percent of the economy. When people spend more, it generates demand for businesses, which then step up hiring.

The private sector added 137,000 jobs, up from August but below July’s revised total. Governments shed 34,000 jobs. The cuts came mainly from local governments, which laid off teachers and other school employees.

State and local governments usually add jobs during economic recoveries. This time, they have cut more than a half-million jobs since the recession ended in June 2009. Without those cuts, overall job growth would be much healthier.

For example, after the recession of 1990 and 1991, state and local governments added about 18,000 jobs a month. If they had done that this month, overall job growth would have been more like 150,000 -- probably enough to lower unemployment some.

In the first four months of this year, the economy added an average of 180,000 jobs a month. But then manufacturing slowed, consumer confidence crashed and Washington fell into gridlock, first over whether to raise the nation’s borrowing limit and then on how best to strengthen the economy.

Meanwhile, hiring slowed. The economy added only 53,000 jobs in May and 20,000 in June. Friday’s figures showed that hiring improved in July, slowed in August and rebounded in September.

The dip in August appears to be because of the fight in Washington and because of increasing concerns about debt owed by European nations. If those nations can’t pay that debt, banks in Europe will be hit with losses, perhaps even causing another financial crisis, like the one in 2008.

Stocks gyrated wildly in response to the turmoil in the U.S. and Europe, and many businesses put off hiring. Companies added only 42,000 jobs in August, far fewer than July‘s gain of 173,000.

The private sector rebounded last month and added 137,000 jobs. But September’s number showed that businesses “are still in a very cautious phase,” said Nigel Gault, an economist at IHS Global Insight.

And the threats from Europe and Washington gridlock aren’t going away, Gault said. Congress still hasn’t agreed on a budget for next year, and will fight over whether to extend Social Security tax cuts, among other measures.

Gault forecasts U.S. economic growth at a 2.4 percent annual rate for the third quarter, which includes July, August and September. He expects growth at 1 percent for the last three months of the year. Normal growth is more like 3 percent.

Federal Reserve Chairman Ben Bernanke warned Congress this week that the economic recovery was “close to faltering,” with slow job growth dragging down consumer confidence.