U.S. businesses added a modest 148,000 jobs in September, far short of the 180,000 analysts were expecting. Still, job gains were enough to lower the unemployment rate to 7.2 percent, the lowest in nearly five years. But, the first jobs report since the government shutdown suggests the U.S. economy may be losing steam.
Concerns about the tepid U.S. recovery may be hurting the job market.
And the political strife in Washington that led to the first government shutdown in 17 years didn’t help, says economist Gus Faucher at PNC Financial Services.
"So they've been reluctant to hire, and also I think you have concerns about the health care law that might be weighing on hiring as well," said Faucher.
Despite the smaller than expected job gains in September, fewer Americans filed for unemployment benefits, helping to bring the nation’s unemployment rate to its lowest level in nearly five years.
Stocks rose on Wall Street after the release of the government report.
Economist Michael Strain at the conservative American Enterprise Institute says that’s because the modest job growth means the U.S. central bank will be less likely to scale back its bond purchases.
“The likelihood of the Fed tapering in 2013 is pretty close to zero in my opinion," said Strain.
The Fed has been buying $85 billion in government bonds and securities every month to keep interest rates low and encourage consumers and businesses to spend. Strain doesn’t see the U.S. economy recovering fast enough for the Federal Reserve to change course this year.
He acknowledges the Congressional bickering in Washington has hurt the U.S. economy, but he says it has nothing to do with the job slowdown in September.
“The survey week for the data was the middle of September which was before the shutdown and the debt ceiling debate really heated up. So if we’re going to see anything related to the shutdown or the debt ceiling, it would probably be in October’s numbers," said Strain.
On the bright side, construction jobs rose by 20,000 suggesting the housing market continues to rebound. And government increased hiring by roughly 22,000 jobs last month.
Analysts expect more volatility in the job numbers when October’s employment report comes out - just a little more than two weeks from now.