Job Losses Minimal Last Month

GDO Report

According to the Labor Department, 35,000 jobs came off payrolls last month, and the unemployment rate rose to 5.1% from 4.9%. Before the report, Bloomberg's consensus estimate showed that, on average, economists were predicting that 150,000 jobs were lost last month.

A total of 77,000 jobs were added to revised data for July and August. Average hourly earnings rose 0.2% last month, the employment report indicated.

"After this latest release we can come away with the underlying theme that the U.S. economy was strong before, during, and after the hurricanes," said Michael Gregory, senior economist at Harris Nesbitt. "It provides the economic backdrop with why the [Federal Reserve] wants to keep inflation in check. The real question now is what pauses first, inflation pressures or the Fed?"

The range of estimates for September was extremely wide owing to the uncertainty created by Hurricane Katrina, with economists figuring that anywhere from 25,000 to as many as 350,000 jobs vanished. The unemployment rate was expected to rise to 5.1%.

Hurricane Rita made landfall during the September data collection period. As a result, response rates for the Labor Department's surveys were lower than normal in some areas. However, because the numbers reflect the jobs situation before Rita came ashore, its impact on measures of employment and unemployment was negligible, the government said.

"We are still seeing lots of jobs being created in the middle market sector, which shows our economy is still very strong," said Bill Olson, president and CEO of MRI Network. "The hurricanes have caused pain in the service sector in the short term, but the long-term outcome of Hurricane Katrina will be job creation."