Transcripts

The Latest Jobs Report Isn't A Pretty Picture

SUSIE GHARIB: Surprising news about the job market today, as American businesses cut back hiring in September to the slowest pace in about a year. The Labor Department said today only 51,000 jobs were added to payrolls last month, much lower than economists had expected. But the unemployment rate improved to 4.6 percent. As Suzanne Pratt reports, the changing employment picture could impact interest rate decisions by the Federal Reserve.

SUZANNE PRATT, NIGHTLY BUSINESS REPORT CORRESPONDENT: The last time job creation in the U.S. economy looked this bad was in the period following hurricane Katrina last fall. Weakness in manufacturing and retail sectors were responsible for the lighter than expected additions to U.S. payrolls in September. Non-farm payrolls rose by a scant 51,000 jobs

last month. Offsetting some of the disappointment and complicating the labor picture was news the unemployment rate dropped to 4.6 percent from 4.7 percent.

ETHAN HARRIS, CHIEF U.S. ECONOMIST, LEHMAN BROTHERS: This was surprising that the unemployment rate fell given that job growth now is really just kind of keeping pace with the overall economy. So, it was surprising. I think that yeah, this is probably about as low as we`re going to get. PRATT: But economists say the big story behind the September report is one of massive revisions, suggesting the labor market and perhaps overall economy are much healthier than originally thought. First, the August and July payroll numbers were both revised higher, including the addition of 60,000 more jobs in August, a much larger than normal revision.On top of that, in a preliminary estimate, the Labor Department said during the 12 months ended in March of this year, 810,000 extra jobs were added in the U.S. economy. A final benchmark figure will be released in February.

JOHN RYDING, CHIEF U.S. ECONOMIST, BEAR STEARNS: Bottom line from this report, I think the labor market is tighter than at any time since the second quarter of 2001.

PRATT: Experts say the revisions could change the way the Federal Reserve sees the economy. A tighter labor market suggests increased inflationary pressures, which might mean policymakers would still need to hike rates again. While no change in monetary policy is expected at the Fed`s October 24 meeting, financial markets have recently rallied on the belief the Fed will cut rates early next year.

RYDING: The market has been leaning heavily toward the Fed cutting rates and this report raises a little bit of a question mark against whether that`s an appropriate view.

PRATT: Some experts say the major lesson of today`s employment report is the diminished value of the monthly employment report. Some even suggest the government rethink the way it measures job creation in the U.S. economy. Suzanne Pratt, NIGHTLY BUSINESS REPORT, New York.