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United States

U.S. Creates 148,000 Jobs In September, Well Below Expectations

Employment in the U.S. increased by much less than expected in the month of September, according to a report released by the Labor Department on Tuesday.

The report said non-farm payroll employment increased by 148,000 jobs in September compared to economist estimates for an increase of about 180,000 jobs.

While the job growth in August was upwardly revised to show an increase of 193,000 jobs compared to the previously reported addition of 169,000 jobs, the increase in jobs in July was downwardly revised to 89,000 from 104,000.

The revisions to the two previous months reflect a net increase of 9,000 jobs compared to the previously reported numbers.

Despite the weaker than expected job growth, the unemployment rate dipped to 7.2 percent in September from 7.3 percent in August. Economists had expected the unemployment rate to come in unchanged.

With the unexpected decrease, the unemployment rate dropped to its lowest level since hitting 6.8 percent in November of 2008.

The September jobs report was originally scheduled for release on October 4th but was delayed as a result of the government shutdown.

Rob Carnell, chief international economist at ING, said "These figures certainly do not point to the marked improvement in the economic backdrop that some FOMC members want to see before starting the taper."

"There is no sign of tightness in the labor market, so the Fed will probably feel assured in keeping QE at current levels for some time yet," he added.

The report showed that private sector employment increased by 126,000 jobs in September compared to the addition of 161,000 jobs in August. Government employment rose by 22,000 jobs after increasing by 32,000 jobs in the previous month.

The Labor Department said notable job growth was seen in the construction, wholesale trade, and transportation and warehousing sectors.

On the other hand, employment in the leisure and hospitality industry dropped by 13,000 jobs in September after rising by 21,000 jobs in August.

The report also said average hourly employee earnings rose by 3 cents to $24.09 in September. Compared to the same month a year ago, average hourly earnings have risen by 49 cents or 2.1 percent.

Last week, the Labor Department said the monthly jobs report for October, which was originally scheduled to be released on November 1st, has been pushed back until November 8th.

Noting that the October jobs report will reflect the impact of the government shutdown, Carnell said, "Nothing much will be able to be read into that October data, or the subsequent November 'bounce back' figures released in early December."

"As such, it will only be in January that the Fed starts to get some cleaner data, and only then if the government shutdown deadline on December 15 has not been triggered," he added. "As a result, the taper could easily be on hold until 2Q14."

by RTT Staff Writer