US employers cut a deeper-than-expected 263,000 jobs in September, lifting the unemployment rate to 9.8 per cent, according to a government report today that fuelled fears the weak labour market could undermine economic recovery.
The Labor Department said the unemployment rate was the highest since June 1983 and payrolls had now dropped for 21 consecutive months.
Analysts polled by Reuters had expected non-farm payrolls to drop 180,000 in September and the unemployment rate to rise to 9.8 per cent from 9.7 per cent the prior month. The poll was conducted before reports, including regional manufacturing surveys,showed some deterioration in employment measures.
The government revised job losses for July and August to show 13,000 more jobs lost than previously reported. Preliminary annual benchmark revisions, released together with September's employment report showed that total non-farm payroll employment for March would have to be revised down about 824,000.
Stubbornly high unemployment is viewed as the missing link in the economy's recovery from its worst recession in 70 years. The economy is believed to have started growing in the third quarter.
Since the start of the recession in December 2007, the number of unemployed people has risen by 7.6 million to 15.1 million, the department said. While the decline in payrolls has moderated from early this year, companies are still not hiring on a wide
Manufacturing employment fell by 51,000 in September, while construction industries payrolls dropped. The service-providing sector cut 147,000 workers in September, while goods-producing industries shed 116,000 positions.
Education and health services added a mere 3,000 jobs, while government employment fell 53,000.
Futures on the Standard & Poor’s 500 Index expiring in December slid 1 per cent to 1,017.5 at 8.31am. in New York after the Labor Department said employers cut 263,000 jobs.
The S&P 500 has retreated 1.4 per cent this week on concern the seven-month rally in equities has outpaced prospects for an economic recovery. US stocks yesterday tumbled the most in
three months as a gauge of manufacturing unexpectedly fell and jobless claims grew more than forecast.
The S&P 500 jumped almost 15 per cent in the July-to-September period to give it a two-quarter advance of 34 per cent, the biggest since a 42 per cent surge in the first half of 1975.
The Dow also rose 15 per cent in the third quarter and gained 29 per cent in March through September, its steepest two-quarter advance since 1986.
Agencies