U.S. job losses in September worst in a decade, even before the attacks
CAREN BOHAN, Reuters, Washington
The U.S. economy suffered its steepest job loss in a decade in September, the government said on Friday in a report that showed the labor market was deteriorating sharply even before the Sept. 11 attacks.
The number of workers on payrolls outside the farm sector sank 199,000 in September. However, this figure largely did not reflect the economic impact of the Sept. 11 airplane strikes on the World Trade Center and the Pentagon.
Even with the fall in payrolls, the U.S. unemployment rate managed to stay steady at 4.9 percent.
"It's very clear that we're in recession," said Kurt Karl, chief economist at Swiss Re in New York. "The (payroll) employment numbers imply that a 6 percent unemployment rate is on the horizon although it may be three to four months away."
Stock prices, which earlier in the day had been dragged down by the jobs data, later rebounded on hopes that President George W. Bush's proposed stimulus package of up to US$75 billion would give the economy a needed boost.
The Nasdaq Composite Index rose 8 points, or 0.5 percent, to 1,605. The blue-chip Dow Jones industrial average rose 59 points, or 0.65 percent, to 9,120 following Bush's announcement of additional tax cuts to help cushion the nation's economy.
September's was the biggest drop in jobs since a 259,000 jobs decline in February 1991, in the depths of the last recession, and marked the fourth fall in the last six months. Employers have cut half a million jobs since March.
As has been the case for more than a year, job cuts were especially hefty in the ailing manufacturing sector.
Economists widely believe the attacks in New York and Washington plunged the economy into recession -- if it wasn't already in one. The attacks have badly shaken Americans' confidence in the economic outlook, an ominous sign for consumer spending, which fuels two-thirds of gross domestic product growth.
The airline sector, where tens of thousands of layoffs have been announced, has been among the hardest-hit sectors so far. Other tourism-related industries, like hotels, are also suffering.