Jobs increase for first time in 8 months

WASHINGTON -- Businesses added jobs in September for the first time in eight months and the nation's unemployment rate stayed at 6.1 percent, indicating better days may lie ahead for frustrated job seekers.

Payrolls grew by 57,000 last month, the Labor Department reported Friday, and there was even new hope for the slumping manufacturing sector. Some 29,000 factory jobs were lost, considerably fewer than in previous months.

Overall job losses in August, initially reported at 93,000, were revised sharply to 41,000, also a positive sign.

"Wonder of wonders, miracle of miracles, there actually are jobs being created again," said Joel Naroff, president of Naroff Economic Advisors Inc.

Economists had expected the rate to rise to 6.2 percent, with a loss of 25,000 more jobs.

Wall Street surged on the news, with the Dow Jones industrial average up more than 84 points and the Nasdaq with 44 points at close.

President Bush said his administration's efforts to spur a healthier economy were starting to take hold.

"Things are getting better," Bush said in Milwaukee, standing in front of a huge poster of the city's downtown, emblazoned with the White House theme "Strengthening America's Economy."

"But there's still work to do," he said. He challenged Congress to make permanent recently enacted tax cuts rather than let them expire on schedule.

Analysts warned against too much optimism from the first jobs increase since January. "We should keep in mind that one month, a trend does not make," Naroff said.

100,000 job growth

Job growth needs to be consistently above 100,000 a month for confidence in a rebound, said Mark Zandi, chief economist at Economy.com.

"The job market is stabilizing," Zandi said of Friday's report. "But it also shows the market is far from healthy. It's simply flat. It's not eroding. It's a step in the right direction, but it's not enough."

Unemployed workers seeking jobs for 27 weeks or more jumped to 2.1 million last month from 1.9 million in August. Also, people working part time because they can't find full-time work increased to nearly 5 million, up from 4.4 million in August.

The weak hiring outlook could mean trouble for Bush's re-election chances next year. The 10 Democrats vying to challenge him have latched onto the economy as a campaign issue, criticizing the administration for tax cuts they say have benefited the wealthy and failed to improve the lives of ordinary Americans. The economy was a major factor in the defeat of Bush's father when he sought re-election to the presidency in 1992.

"The administration's tax cuts have not created jobs as promised, but they have created huge deficits that will stifle growth in the future and burden our children and grandchildren with debt," said Rep. John Spratt of South Carolina, the top Democrat on the House Budget Committee.

The economy has improved in recent months, growing at a 3.3 percent rate in the second quarter. Analysts are predicting even more momentum in the current quarter, growing at a rate of 5 percent.

But improvements are just beginning to trickle down to the jobs market, always the last sector of the economy to rebound. The soaring trade deficit is forcing companies to send jobs overseas, cutting their costs to compete. Businesses also are relying on existing workers to do more rather than taking on the increased cost of new hires.

Amid signs of an economic rebound, the Federal Reserve last month decided to hold a key short-term interest rate at a 45-year low of 1 percent. Analysts think policy-makers will leave that rate unchanged when they meet on Oct. 28.

In Friday's reports, manufacturing lost jobs for the 37th straight month, a record, although the pace of the hemorrhaging slowed.

Construction employment was up for the seventh straight month.

In the services sector, professional and business services added 66,000 new jobs last month, with half of the gain occurring in temporary employment services. That gain is significant because analysts closely watch the industry for signs of hiring; growing companies often will hire temporary workers before taking on full-time employees.

Gains also were posted in health care and social assistance; transportation and warehousing; and financial services.