US jobs report shows hiring slow-down

Uncertainty about another budget impasse may cause some firms to hold off on employing more staff or expanding

The uncertainty and weakness that hung over the United States job market in September before the government shutdown are not going away.

Employers will probably remain slow to hire as long as the economy struggles to accelerate, consumers limit their spending and Congress keeps putting off a resolution to a budget fight that will resurface early next year.

Just a few months ago, many economists predicted that hiring would pick up by year's end as the effects of tax increases and government spending cuts that kicked in this year faded.

No longer. The September jobs report made clear that hiring isn't strengthening. It's slowing.

Employers last month added 148,000 jobs, a steep drop from the 193,000 gained in August. From January through March, job growth averaged 207,000 jobs a month. For April through June, the average was 182,000. For July through September, it was just 143,000.

"We had assumed that the headwinds would dissipate, but in fact they didn't," said Doug Handler, an economist at IHS Global Insight.

What's more, the 16-day partial shutdown of the Government, which began on October 1, is likely to further depress hiring for October. That's because government contractors and other companies affected by the shutdown imposed temporary layoffs.

And the budget battles that led to the shutdown are likely to flare up later this year and in early 2014. Last week, Congress agreed to keep the Government running only until January 15 while President Barack Obama and Congress seek a broader budget agreement.

In the meantime, uncertainty about another budget impasse and potentially another government shutdown may cause some businesses to hold off on hiring or expanding.

"Companies are not feeling confident enough to expand, to hire, to invest," said Yelena Shulyatyeva, an economist at BNP Paribas. "They're just sitting on the sidelines, being cautious, and watching all these headlines from Washington."

Even as hiring and economic growth have remained tepid in recent months, the stock market has been roaring. Two key reasons: the Federal Reserve's policies have kept long-term interest rates so low that many investors have shifted out of low-yielding bonds and into stocks, thereby driving up stock prices. And corporations have managed to deliver steady profit growth, in part by keeping costs down.

The economy has been growing at a lethargic pace since the recession officially ended in June 2009. Growth has averaged about 2 per cent a year. Job growth since 2010 has averaged about 180,000 a month.

A category that includes hotels, restaurants and entertainment companies, such as amusement parks, has added just 5000 jobs over the past three months.

That's down from 146,000 over the previous three months.

Retailers are still hiring. But the 21,000 positions they added in September were the fewest in six months.

Many economists estimate that the partial government shutdown cut US$25 billion ($29.6 billion) out of the economy and slowed growth to about a 2 per cent annual rate in the October-December quarter.

- AP

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