Employers cut more jobs than forecast last month and the unemployment rate rose to a 26-year high, calling into question the sustainability of the economic recovery.
The unemployment rate rose to 9.8 per cent, the highest since 1983, from 9.7 per cent in August, the Labor Department said today in Washington. Payrolls fell by 263,000, following a revised 201,000 decline the prior month that was more/less than previously reported.
Federal Reserve Chairman Ben S Bernanke on thursday said the expansion may not be strong enough to “substantially” bring down unemployment, indicating the central bank will be slow to drain the trillions of dollars it’s pumped into the economy. UAL Corp is among companies still cutting jobs on concern spending will fade as government stimulus wanes.
“The employment situation continued to deteriorate,” Rich Yamarone, chief economist at Argus Research in New York, said before the report. “Given the crummy economic climate, businesses have no incentive to turn on the hiring spigots. We suspect the economy will make a turn for the worse.”
Revisions subtracted 13,000 from payroll figures previously reported for August and July.
Payrolls were forecast to drop 175,000 in September after a 216,000 decline initially reported for August, according to the median of 84 economists surveyed by Bloomberg News. Estimates ranged from decreases of 260,000 to 100,000. Job losses peaked at 741,000 in January, the most since 1949.
The jobless rate was projected to rise to 9.8 per cent. Forecasts ranged from 9.6 per cent to 9.9 per cent.
The Labor Department today also published its preliminary estimate for the annual benchmark revisions to payrolls that will be issued in February. They showed the economy may have lost an additional 824,000 jobs in the 12 months ended March 2009. The data currently show a 4.8 million drop in employment during that time.