Economy adds 148K jobs; unemployment rate falls to 7.2 percent

The economy added 148,000 jobs in September while the unemployment rate fell to 7.2 percent.

The job growth was a bit below expectations, as some economists had predicted the economy would add 150,000 to 200,000 jobs in September.

{mosads}Revised calculations for growth in July and August were a mixed bag, with the report from the Bureau of Labor Statistics finding the economy added 193,000 jobs in August instead of the 169,000 originally forecast.

In July, it revised its job growth down to 89,000, however, from the 104,000 initially recorded.

This is the first jobs report since the 16-day government shutdown, which took an estimated $24 billion out of the economy.

It is for the month preceding the shutdown, when the economy might have been affected by business’s worries about the fiscal fights in Washington, which also included a separate battle over raising the nation’s debt ceiling.

The report was supposed to have come out weeks ago but was delayed by the shutdown. An additional report for the month of October will be released Nov. 8. It could give a further glimpse into how Washington’s fiscal fights have affected the larger economy.

Jason Furman, chairman of the Council of Economic Advisers, suggested policymakers turn their focus to reducing uncertainty and investing in job creation, especially with the prospect that the October report could be worse.

“While job growth remained solid in September, there is no question that the focus of policy should be on how to achieve a faster pace of job growth,” he said.

“Today’s delayed report describes the economy more than a month ago. More recent indicators suggest the labor market worsened in the month of October.”

Mark Zandi, chief economist for Moody’s Analytics, said September’s sluggish job growth could be caused by tax hikes imposed on Jan. 1 as part of the “fiscal cliff” deal, and because of additional spending cuts coming in January under sequestration.

“They’re really having an impact on broader growth and job creation so, there are a lot of things going on, but I think that the most significant weight on the job market at this point is those fiscal headwinds,” he said Tuesday on MSNBC.

Zandi said it might take until early next year to see a “clean” jobs report that is unaffected by the recent stalemate in Washington.

As a result, he suggested the Federal Reserve is unlikely to begin tapering its $85 billion in monthly stimulus until next year, when there is a better picture of how the recovery is doing.

The Fed and other economists are literally “flying blind” because “they really don’t know what is happening in the economy,” Zandi said.

Stock markets were on the rise following release of the data as investors remain optimistic that the central bank would continue its bond-buying program.

In the past three months, the economy has added an average of 143,000 jobs per month, below its three year pace of about 150,000 jobs.

A bright spot in the September report was the growth in construction employment, which rose by 20,000 in September, after showing little change over the prior six months.

Government jobs, frequently a thorn in the side of the figures, were up by 22,000.

Since June, the jobless rate has fallen by four-tenths of a percentage point, but this is mostly from workers leaving the labor force.

The labor participation rate continued to hover around a 35-year low last month.

In September, the number of long-term unemployed, who have been out of work for at least six months, was 4.1 million and now account for 36.9 percent of the unemployed. That number has dropped by 725,000 over the past year.

If job growth is being held back by concerns about Washington, employers will not get much of a reprieve.

Under the deal that opened the government last week, Congress and the White House face a Jan. 15 deadline to continue funding for the government. By Feb. 7, they must agree one again to raise the debt ceiling, though that deadline could be extended by the Treasury Department’s use of extraordinary measures.

Business groups and economists have said that the uncertainty created by policymakers has hampered economic growth in the past five years following one of worst economic downturns in the nation’s history.

Recent reports have shown that fiscal bickering has meant the loss of between 1 million and more than 2 million jobs during the recovery.

In the past three months, the economy has averaged an additional 143,000 jobs per month, below its three-year pace of about 150,000 and a drop from the 185,000 jobs generated each month over the past year.

— This story was updated at 11:14 a.m.