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Economy likely creating some jobs, but not enough

2010-10-08 08:41:31

By CHRISTOPHER S. RUGABER, AP Economics Writer Christopher S. Rugaber, Ap

Economics Writer 1 hr 53 mins ago

WASHINGTON Companies likely added a small number of jobs last month, but

hardly enough to bring much relief to the nation's 15 million unemployed.

On Friday, the Labor Department will issue the final monthly jobs report before

the midterm congressional elections. The report is likely to leave President

Barack Obama in a precarious position: Democratic members of Congress will face

voters with unemployment likely above 9.5 percent.

Economists estimate private employers added a net total of 75,000 jobs in

September. But they expect that number to be offset by the loss of an equal

number of temporary Census jobs. Overall, economists expect no change in the

nation's total payrolls.

The unemployment rate is projected to rise to 9.7 percent from 9.6 percent,

according to a survey of economists by Thomson Reuters, as more people look for

work. People who are out of work aren't counted as unemployed until they

actively look for a job.

Economists see few signs that the jobs situation will improve anytime soon.

"There's not much growth going on in the economy right now, so that doesn't

give employers much reason for hiring," said Nigel Gault, an economist at IHS

Global Insight.

Gault said he expects the pace of job creation to remain similarly weak for the

rest of this year. Some economists say the unemployment rate could top 10

percent by next year.

The economy expanded at a scant 1.7 percent annual rate in the April-June

quarter. Most analysts think growth was similarly weak in the July-September

quarter.

Since the recession ended in June 2009, the economy has grown 3 percent,

according to economists at Deutsche Bank. That's less than half the average 6.5

percent pace in postwar recoveries.

Some encouraging signs did emerge in government reports Thursday. For the

fourth time in five weeks, fewer people applied for unemployment benefits. The

number who did so fell to the lowest level since July.

And job openings rose in August for the second-straight month, to 3.2 million.

But neither figure is strong enough to signal broad gains in job creation.

Employers advertised 4.4 million job openings in December 2007, when the

recession began.

"The data that we're seeing is still consistent with a very slow jobs

recovery," said Michelle Meyer, an economist at Bank of America Merrill Lynch.

Weak job growth will likely force the Federal Reserve to take further steps to

boost the economy. Most economists expect the Fed to act next month to buy

government debt to try to lower interest rates and spur more borrowing.

The unemployment rate can rise even when the economy is adding jobs if the

jobs aren't enough to keep up with the growing population. Private-sector job

creation in September will likely to fall below the 125,000 net new jobs needed

just to keep up with population growth. That growth stems from young people

seeking their first jobs and new immigrants looking for work.

Even more jobs will be needed to absorb many of the 1.1 million Americans who

have stopped looking for work and won't resume their search until hiring picks

up.

The Federal Reserve Bank of San Francisco estimates that employers would have

to create as many as 300,000 net jobs each month to reduce the unemployment

rate to 8 percent within two years. That figure takes into account both

population growth and the return of some discouraged job seekers.