Analysts are pleasantly surprised but warn against reading too much into the expansion of payrolls by 57,000 last month.
By wire services
Published October 4, 2003
WASHINGTON - Businesses added jobs in September for the first time in eight months, and the nation's unemployment rate stayed at 6.1 percent, suggesting better days may lie ahead for frustrated job seekers.
Payrolls grew by 57,000 last month, the Labor Department reported Friday, and there was even new hope for the slumping manufacturing sector. Some 29,000 factory jobs were lost, considerably fewer than in past months.
Overall job losses in August, initially reported at 93,000, were revised sharply to 41,000, also a positive sign. But the increase in payrolls outside the farming sector was still not large enough to match the growth of the population, and the percentage of adults with jobs fell to the lowest level in 10 years.
"Wonder of wonders, miracle of miracles, there actually are jobs being created again," said Joel Naroff, president of Naroff Economic Advisors Inc.
Economists had expected the rate to rise to 6.2 percent, with a loss of 25,000 more jobs.
Stocks soared on the jobs report, though they retreated late in the day. The Dow Jones Industrial Average finished up 84.51 points, at 9,572.31. The broader S&P 500 index rose 9.61 points to 1,029.85. The tech-heavy Nasdaq composite index gained 44.35 points to close at 1,880.57.
The employment gains swept across much of the economy, even if they remained small. Retailers added more jobs than they had since July 2002, and temporary-help agencies - one of the first sectors to cut workers when the economy weakened in 2000 - added 66,000 people to their payrolls for the fifth straight month. That gain also is significant because analysts closely watch the industry for signs of hiring; growing companies often will hire temporary workers before taking on full-time employees.
The announcement drove up shares in temporary staffing agencies with the expectation that they will benefit first during any upturn. Shares in temporary employment agency giant Manpower, for instance, surged more than 6 percent to close at a new 52-week high of $40.23 apiece. Shares of Monster Worldwide Inc., the biggest U.S. employment advertising Internet site, rose $2.61 to close at $28.50, up 10 percent.
In the Tampa Bay area, shares in the Tampa staffing agency Kforce Inc. reached a three-year high, topping out during the day at $8.83 a share before closing at $8.63, up 56 cents, or 7 percent. The Clearwater temp agency Ablest Inc. saw its stock rise 20 cents a share to close at $5.45.
Mark Marcon, an analyst at Wachovia Corp., wrote in a research report that staffing, recruiting and payroll companies will benefit from the increased hiring. "We view this as a very positive report," Marcon wrote.
Meanwhile, manufacturing lost jobs for the 37th straight month, a record, although the pace of the hemorrhaging slowed.
President Bush said his administration's efforts to spur a healthier economy were starting to take hold.
"Things are getting better," Bush said in Milwaukee, standing in front of a huge poster of the city's downtown, emblazoned with the White House theme "Strengthening America's Economy."
"But there's still work to do," he said. He challenged Congress to make permanent recently enacted tax cuts rather than let them expire on schedule.
Analysts warned against too much optimism from the first jobs increase since January. "We should keep in mind that one month a trend does not make," Naroff said.
The economy is benefiting from two one-time boosts: more government spending for the war in Iraq in the spring and a new round of income-tax cuts that took effect in the summer. When the effect of those boosts fades, as it inevitably will, the recovery could peter out.
"Once the tax cuts are in and the spending is in, where's the next act?" wondered David Wyss, chief economist at Standard and Poor's bond rating agency in New York.
Job growth needs to be consistently above 100,000 a month for confidence in a rebound, said Mark Zandi, chief economist at Economy.com.
"The job market is stabilizing," Zandi said of Friday's report. "But it also shows the market is far from healthy. It's simply flat. It's not eroding. It's a step in the right direction, but it's not enough."
Average weekly earnings for rank-and-file workers - who make up about three-quarters of the work force - fell last month for the first time since April, by 33 cents, to $520.67. The number of people who have been out of work for at least 27 weeks and continue to look for a job jumped to 2.1-million, from 1.9-million. Almost 5-million people were working part-time because they could not find full-time work, up from 4.4-million in August.
The weak hiring outlook could mean trouble for Bush's re-election chances 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. The economy was a major factor in the defeat of Bush's father when he sought re-election to the presidency in 1992.
"The administration's tax cuts have not created jobs as promised, but they have created huge deficits that will stifle growth in the future and burden our children and grandchildren with debt," said Rep. John Spratt of South Carolina, the top Democrat on the House Budget Committee.
The economy has improved in recent months, growing at a 3.3 percent rate in the second quarter. Analysts are predicting even more momentum in the current quarter, growing at a rate of 5 percent.
But improvements are just beginning to trickle down to the jobs market, always the last sector of the economy to rebound. The soaring trade deficit is forcing companies to send jobs overseas, cutting their costs to compete. Businesses also are relying on existing workers to do more rather than taking on the increased cost of new hires.
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 when they meet Oct. 28.
- Times staff writer Jeff Harrington contributed to this report. Information from the Associated Press, Bloomberg News, Knight Ridder News Service and the New York Times was used in this report.
