Payroll data indicates a lack of momentum - The Buffalo News

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Payroll data indicates a lack of momentum

Employers in the U.S. added fewer workers to payrolls than projected in September, indicating the world’s largest economy had little momentum leading up to the federal government shutdown.

The addition of 148,000 workers followed a revised 193,000 gain in August that was larger than initially estimated, Labor Department figures showed Tuesday in Washington. The median forecast of 93 economists surveyed by Bloomberg called for a 180,000 advance. Unemployment fell to 7.2 percent, the lowest level since November 2008.

Stocks and Treasuries climbed as the report supported expectations that the Federal Reserve won’t hurry to reduce the monthly bond purchases aimed at spurring growth and employment. Progress in the labor market depends on how quickly the economy can bounce back from the loss of business and confidence caused by the budget battles in Washington.

“It’s not like we’re falling off a cliff, but there’s a failure to get any spark in employment,” said Michael Feroli, chief U.S. economist at JPMorgan Chase & Co. in New York. “Had this report come in strong, there was some possibility of the Fed tapering in December, but that possibility seems to be very small now.”

The September payroll figure reflects the pay period that includes the 12th of the month, two weeks prior to the 16-day federal shutdown.

The unemployment rate, derived from a separate Labor Department survey of households rather than employers, was forecast to remain at 7.3 percent, according to the Bloomberg survey median.

It will take some time to determine whether the shutdown and political brinkmanship in Washington led to a sharp pullback in activity this month, so the data may be discounted, some economists said.

“It’s hard to imagine that October payrolls will be any better than September, considering the additional effect of the shutdown,” said Guy Lebas, chief fixed income strategist at Janney Montgomery Scott LLC in Philadelphia.

Employment climbed at temporary-help agencies, wholesalers, transportation and warehousing businesses and retailers. State and local government hiring also picked up.

Private employment, which excludes government agencies, rose 126,000 after a revised gain of 161,000. Private payrolls were also projected to rise by 180,000, the survey showed.

Full-time employment climbed by 691,000 in September while part-time hiring dropped by 594,000.

Employment at factories increased by 2,000 following a 13,000 gain in the previous month. Construction companies added 20,000 workers, the most since February, and retailers took on almost 21,000 employees.

Faster hiring that leads to bigger gains in wages would help to accelerate consumer spending, which accounts for about 70 percent of the economy.

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