Today’s report by the Labor Department that 95,000 jobs were shed in September while the unemployment rate remained unchanged at an elevated 9.6 percent shows that the economy is still struggling and there is much uncertainty in the private sector. Falling for a second consecutive month, for the first time since last December, manufacturing employment edged down by 6,000 in September. While manufacturers overall have added 136,000 to payrolls so far this year, the fact that 99 percent of this increase took place during the first five month of the year shows that the economic recovery is cooling, not gaining steam. This is largely because temporary forces, such as inventory restocking and several fiscal stimulus measures, have largely played themselves out.
The main reason for the loss of 159,000 government workers last month was because of declines in temporary Census workers employed to conduct the 2010 Census. Meanwhile, the sluggish 64,000 gain in private sector employment shows that employers remain guarded in their outlook and remain pessimistic with respect to the underlying strength of the recovery. This is highlighted by the fact that increases in temporary employment, which rose to nearly 50,000 in January, have been edging down ever since and increased by less than 17,000 last month.
The uncertainty about the underlying strength of the recovery coupled with possible legislative and regulatory actions coming from Washington is continuing to constrict private sector job growth which kept unemployment higher in September than it was 15 months ago when the recession ended in June of 2009.