Payrolls fell by 159,000, more than anticipated, after a 73,000 decline in August, the Labor Department said today in Washington. The jobless rate, the last one reported before the presidential election, remained at 6.1 percent. Hours worked reached the lowest level since records began in 1964.
The world's largest economy may be headed for bigger job losses as the worst financial meltdown since the Great Depression causes consumers and companies to retrench. A sinking labor market and rising borrowing costs raise the odds Federal Reserve policy makers will cut interest rates by their Oct. 29 meeting.
Revisions added 4,000 to payroll figures previously reported for August and July. The Labor Department said it was ``unlikely'' that Hurricane Ike, which struck the Gulf Coast last month, ``had substantial effects'' on payrolls figures.
After today, the total decline in payrolls so far this year has reached 760,000. The economy created 1.1 million jobs in 2007.
Payrolls were forecast to drop 105,000 after declining by a previously estimated 84,000 in August, according to the median of 76 economists surveyed by Bloomberg News. Estimates ranged from declines of 156,000 to 60,000. The jobless rate was projected to remain at 6.1 percent.
The misery index, which adds the unemployment and inflation rates, surged to 11.7 percent in August, the highest level since 1991.
The jobless rate is up 1.4 percentage points from September 2007. Since World War II, the rate has risen only twice during similar periods before presidential elections. In both cases -- when Bill Clinton defeated George H. W. Bush in 1992 and when Ronald Reagan beat Jimmy Carter in 1980 -- the incumbent party lost the election.
Factory payrolls fell 51,000 after decreasing 56,000 in August. Economists had forecast a drop of 57,000.
Today's report also reflected the housing slump. Payrolls at builders declined 35,000 after falling 13,000. Financial firms decreased payrolls by 17,000, the most since November last year.
Service industries, which include banks, insurance companies, restaurants and retailers, subtracted 82,000 workers after eliminating 16,000 in the previous month. Retail payrolls slid by 40,100 after a 25,400 drop.
Government payrolls increased by 9,000, the smallest gain since January.
Mounting job cuts will further limit consumer spending, which accounts for more than two-thirds of the economy. A Bloomberg survey in September predicted spending will be unchanged this quarter, the weakest performance since 1991.
The Institute for Supply Management's index on Oct. 1 showed manufacturing shrank in September at the fastest pace since the last recession in 2001. The odds the central bank will lower its benchmark rate by a half percentage point, to 1.5 percent, later this month rose to 34 percent that day, compared with no chance a week earlier.
The probability jumped to over 90 percent yesterday as stocks tumbled and borrowing costs surged.
The average work week shrank to 33.6 hours from 33.7 hours, today's report showed. Average weekly hours worked by production workers slipped to 40.7 hours from 40.9 hours, while overtime dropped to 3.6 hours from 3.7 hours. That brought the average weekly earnings down by 81 cents to $610.51 in September.
Workers' average hourly wages rose 3 cents, or 0.2 percent, to $18.17 from the prior month. Hourly earnings were 3.4 percent higher than September 2007. Economists surveyed by Bloomberg had forecast a 0.3 percent increase from August and a 3.6 percent gain for the 12-month period.
The payrolls report included the government's preliminary estimate for annual benchmark revisions. The Labor Department said payrolls for the 12 months ended in March 2008 will probably be revised down by ...