New jobs fall short of Sept. forecast; Analysts expected 150,000; only 96,000 were added. But unemployment held steady.

By Bob Fernandez and Jane M. Von Bergen
Inquirer Staff Writers
9 October 2004
The Philadelphia Inquirer

In the last sweeping snapshot of the nation's employment situation before the presidential election, the government said yesterday that the job market limped forward in September with 96,000 new jobs. The U.S. unemployment rate remained unchanged at 5.4 percent, with 8 million jobless. The job-growth figure fell short, by one-third, of forecasts, and left the Kerry and Bush campaigns scrambling to give it the best spin. The Kerry campaign pounced on the news, saying the economy's performance has been inadequate and is stranding American workers. "Our economy has failed to create even enough jobs to cover new workers coming into the job market, not to mention the millions who are unemployed, working part-time or temporary jobs or who have given up and dropped out," Kerry said in a statement. Commerce Secretary Donald L. Evans countered by saying that the economy is doing well given the stresses put on it and since last August has created 1.9 million new jobs. It was the "13th straight month we've had job gains despite being in a wartime economy. Hurricanes and high energy prices have dampened our resilient recovery," he said. The Labor Department said yesterday in its monthly report - the next one is due Nov. 5 - that the four hurricanes in August and September did not have a major impact on the nation's employment. Most analysts had forecast 150,000 new jobs for September and the finer details of the report gave some economists cause for concern. The nation's manufacturing companies in September reversed direction and shed jobs - despite the fact that the industrial sector is in the midst of a cyclical boom and should be putting thousands of new people to work each month. Retail stores lost jobs for the fourth straight month, reflecting the fact that higher gasoline prices are preventing people from spending money on other items. Retailers apparently are responding by cutting staff - in all 33,900 retail employees gone from the nation's stores since June, the government says. Wal-Mart Stores Inc., the largest U.S. retailer and the largest in Pennsylvania, reported Thursday that sales at stores open at least a year rose 2.4 percent in September, the slowest gain in 15 months. Two stronger parts of the job market were government agencies, which added 37,000 workers, and professional and business services companies, which added 34,000. "The reality is that we are seeing an economy that is reeling under the weight of high oil prices," said Chris Low, chief economist with FTN Financial in New York. Business leaders "are nervous because they are looking at consumers and how they have financed their purchases with debt the last several years and they don't think it can continue." Yesterday's report "fits in mostly with what we have seen in the economy in the last couple of months. The numbers are not that good, but they are not bad," Low said. He felt the low rate of job growth will provide Kerry with an attacking point while the 5.4 percent unemployment rate will bolster Bush. "There's plenty of ammunition on both sides," he said. Low and other economists said that despite the weak job market, the nation's economic output was growing strongly. Companies also are sitting on large piles of cash because of surging profits but seem unwilling to spend it to expand because of the uncertainty over oil prices, Low said. John Silvia, chief economist with Wachovia Bank, said he believed that structural changes were taking place in the economy and that neither candidate was talking about how to address them. "What Bush needs to reassess is why we are not getting the big bang" in employment growth from his tax-cut policies, Silvia said. As for Kerry, Silvia said the nation would not see a return of jobs lost to "offshoring" in recent years, though the Democratic candidate has suggested otherwise. "We have a darn good economy here, but we can't translate it into employment," he said. Higher productivity and the vast expansion of global trade have altered the traditional relationship between economic output and new jobs, Silvia said. In the Philadelphia region, professionals who are closely involved with hiring say they see improvement but no 1990s-style boom. Rich Milgram, chief executive officer of Artemis HR Inc., an online job service in King of Prussia, said there were more job postings by companies but fewer people putting resumes on his Phillyjobs.com site in September. He said the sectors in the Philadelphia area that appeared to be adding jobs were health care and sales. "It's improving, but it's not staggering or dramatic," Milgram said. David Shabot, Philadelphia office managing director for executive search firm Korn/Ferry International, said yesterday that the breadth of the company's recruitment efforts was expanding, "signaling a comeback." "If you are hiring people at a senior position, you will be hiring underneath that person, we believe," Shabot said. At a Sept. 30 meeting of the human-resource managers and professionals from the Philadelphia area, the mood was at times cautiously optimistic and concerned. ReviewNet Inc., a Jenkintown company that designs tests used to screen potential employees, has seen an increase in sales. "People are still cautious, but I'm selling testing and if I'm selling testing, then it means that they are hiring," said Mark Garrison, president and chief executive officer. Employers are "very cautiously spending," said Vicky Gallagher, membership director of the MidAtlantic Employers' Association, which represents 700 employers in the Philadelphia area. "They really don't know where the economy is going, and they are just trying to maintain the status quo."