Tepid job growth supports Fed's cautious stance

Tue Oct 22, 2013 1:22pm EDT
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By Lucia Mutikani

WASHINGTON (Reuters) - U.S. employers added far fewer workers than expected in September, suggesting a loss of momentum in the economy that will likely add to the Federal Reserve's caution in deciding when to trim its monthly bond purchases.

Nonfarm payrolls increased by 148,000 workers last month, the Labor Department said on Tuesday. While the job count for August was raised, employment gains in July were revised lower and were the weakest since June 2012.

The closely watched employment report suggested the economy lost steam even before an acrimonious budget fight that led to a damaging partial shutdown of the federal government for 16 days.

"The numbers indicate that the economy is growing at a modest pace at best," said Sung Won Sohn, an economics professor at California State University Channel Islands in Camarillo, California. "Considering the uncertainties from the government shutdown, tapering (of the Fed's bond purchases) has been postponed until further notice."

But there was a silver lining in the report. The unemployment rate fell a tenth of a percentage point to 7.2 percent, the lowest level since November 2008, even as the share of working-age Americans who either have a job or are looking for one held at a 35-year low.

A measure of underemployment that includes people who want a job but who have given up searching and those working part time because they cannot find full-time jobs also fell a tenth of point to 13.6 percent, the lowest since December 2008.

Economists had expected the economy to add 180,000 jobs in September and the unemployment rate to hold at 7.3 percent.

Stocks rose as investors welcomed the prospect of continued monetary stimulus from the U.S. central bank, with the Standard & Poor's 500 index reaching a record intraday high.   Continued...

A person enters at a jobs center in San Francisco, California in this February 4, 2010 file photo. REUTERS/Robert Galbraith/Files