(The author is a Reuters Breakingviews columnist. The opinions expressed are his own.)
By Martin Hutchinson
NEW YORK (Reuters Breakingviews) - It looks as though the U.S. economy is muddling along rather than relapsing into recession. The jobs increase of 103,000 in September beat expectations but wasn't enough to cut long-term unemployment, which increased. Still, alongside positive manufacturing data, it suggests the outlook is for slow, patchy growth, not a double-dip.
The six-figure headline jobs increase includes 45,000 striking Verizon workers returning to work, but also a reduction of 34,000 in the government workforce, so the net private sector workforce gain was 92,000. Moreover, the apparent public sector job losses were an effect of seasonal adjustment; local governments hired fewer than the usual September ramp-up in education staff. Meanwhile, July and August employment figures were revised upward, suggesting that the overall trend is positive, if not booming.
That confirms recent Institute for Supply Management data showing its manufacturing index ticking up last month while the services index dipped only marginally. Since both indices are above 50, they indicate an economy that is still expanding, albeit at a slow rate.
The slow expansion is not sufficient to make much of a dent on unemployment, with the overall rate holding at 9.1 percent. The number of long-term unemployed people, meanwhile, increased by 188,000 from August. However the increase since September 2010 was smaller, while the number of so-called discouraged workers declined. The broadest definition of unemployment rose slightly to 16.5 percent, but that was partly due to a slightly higher workforce participation rate. Prospects for the long-term unemployed are not improving, but at least their number has stopped swelling as it did in 2009-10.
Overall, the U.S. economic recovery remains sluggish, but the steady increase in private sector jobs and the unconvincing results of previous monetary and fiscal stimulus suggest that further efforts in that direction may do no good, and could cause harm. With the next presidential election scarcely more than a year away, Barack Obama will be hoping he can find a miracle cure -- or something that looks like one. But what the patient really needs is to be allowed to recover slowly.
-- U.S. nonfarm payroll employment increased by 103,000 on a seasonally adjusted basis in September, the Bureau of Labor Statistics reported on Oct. 7. The U.S. unemployment rate was unchanged at 9.1 percent. Job figures for July and August were revised upward.
-- The workforce participation rate rose 0.2 percentage point to 64.2 percent on a seasonally adjusted basis. The number of long-term unemployed increased by 188,000 from August and rose by 89,000 year-on-year, while the number of discouraged workers increased by 60,000 to 1,037,000 but declined 172,000 since September 2010.
-- The U.S. Institute for Supply Management on Oct. 3 reported its manufacturing index for September at 51.6, up from 50.6 in August, while the services index reported on Oct. 5 stood at 53, a marginal decline from 53.3 in August.
-- Bureau of Labor Statistics release: link.reuters.com/pam39n
(Editing by Richard Beales and Martin Langfield)
Trending On Reuters
In a rare interview India's former PM Manmohan Singh criticised his successor Narendra Modi's government for failing to take advantage of lower commodity prices to propel economic growth and an inconsistent policy towards neighbour Pakistan. Full Article