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September was likely another weak month for hiring, underscoring economy's sluggishness
WASHINGTON (AP) ' The U.S. economy will likely show its fifth straight month of slight or no job creation when the government issues its September employment report Friday. Another weak month would underscore the sluggishness of the economy and the risk of another recession.
Economists forecast that employers added just 56,000 net jobs in September. That isn't enough even to keep pace with population growth or lower the unemployment rate. The rate is expected to remain at 9.1 percent for a third straight month, according to a survey of economists by FactSet.
The faltering economy has led many employers to reduce hiring. The economy grew at an annual rate of just 0.9 percent in the first six months of the year. Since then, Europe's debt crisis and stock market declines have heightened fears that the economy will struggle to grow enough to avoid a recession.
In the first four months of this year, employers added an average of 180,000 jobs a month. But in the four months since, job gains have averaged just 40,000. In August, employers didn't add any jobs ' the worst showing since September 2010.
The economy must create at least 125,000 net jobs a month to keep up with a growing population. At least twice as many are needed to rapidly shrink the unemployment rate. Unemployment has topped 8 percent for the past 31 months. It's the longest such stretch on record.
The economy desperately needs more hiring to boost the overall incomes of Americans, who would likely then spend more. Consumer spending accounts for 70 percent of the economy.
It would require robust job growth to put the many long-term unemployed Americans back to work. Nearly 4.5 million people have been unemployed for more than year. That's equal to about one-third of the total unemployed ' a record.
The job total for September should receive a boost from the return of about 45,000 Verizon workers who ended a three-week strike in late August. Their absence reduced the August job totals by 45,000, and their return should bolster the September number by a similar amount.
Slower hiring has put pressure on President Barack Obama little more than a year before the 2012 election.
On Thursday, Obama urged Congress to embrace his job-creation proposal, which he called an insurance plan against a return to recession. Obama said that without his nearly $450 billion package of tax cuts and public works spending, hiring and growth will be weaker. He said the bill could help prevent another downturn if Europe's debt crisis worsens.
Republicans have resisted Obama's plan, saying they oppose the higher taxes that he and other Democrats would use to pay for it.
The economy has sent mixed signals this week about the job market. But most signs point to only slight hiring.
On Thursday, the government said more people sought unemployment benefits last week, evidence that layoffs remain elevated. Weekly applications rose to a seasonally adjusted 401,000. Applications would need to fall consistently below 375,000 to signal sustainable job growth.
Still, the increase followed a sharp decline the previous week, and applications have trended lower in the past month. In addition, factories hired more workers in September, according to the Institute for Supply Management, a group of purchasing managers.
But a more troubling note came from the ISM in a separate survey released Wednesday. It said service companies cut staff in September. Consumers have been holding back on spending, reducing business for service providers such as restaurants, hotels, retailers and financial service firms.
On Tuesday, Federal Reserve Chairman Ben Bernanke warned that the economic recovery "is close to faltering." Bernanke said that the economy is growing more slowly than the Fed had expected and that the biggest factor depressing consumer confidence is poor job growth.