US jobless rate tumbles to 30-year low

WASHINGTON: The US unemployment rate sank back to 30-year lows in September

even as employers added to their payrolls at a moderate rate, the government

said on Friday, calling into question beliefs the job market has been softening.

The jobless rate fell to 3.9 per cent, its lowest level since April, from an

August rate of 4.1 per cent. The April rate had been the lowest since 1970.

The number of workers on payrolls outside the farm sector rose by 252,000,

rebounding from a revised 91,000 jobs drop in August. The department previously

said August payrolls fell by 105,000.

The payroll data was in line with the forecasts of US economists in a Reuters

survey, who had, on average, expected a September jobs gain of 232,000.

But the lower unemployment rate signalled an unforeseen tightening in the

labor market as economists had expected the jobless rate to hold at 4.1 per

cent.

As the unemployment rate drifted slightly higher in recent months from

April's three-decade low of 3.9 per cent, economists had thought the red-hot

labor market might finally be cooling in response to the six interest-rate rises

from the Federal Reserve between mid-1999 and May of this year.

In its Tuesday meeting, Fed officials cited the scarcity of workers as a

possible risk for inflation going forward but decided to keep interest rates

unchanged.

The payroll data appeared to back up the slowing-economy scenario, as the

trend for private payrolls had shown less robust hiring.

But the payroll series has been tough to interpret as the government in the

past few months has been gradually shedding workers brought on for the US

Census, a once-a-decade count of the population, and amid a big strike at

Verizon Communications, the East Coast telecom giant.

Those special factors skewed the September numbers as well. The return of

around 85,000 Verizon workers helped boost the payroll figure but that was

partly offset by a new but smaller strike at a manufacturing company. Also

offsetting the gain was the loss of 27,000 temporary government workers who had

been hired for the Census.

The Labor Department said that stripping out the effects of the strikes and

the Census layoffs, payrolls would have risen by 204,000 in September.

Manufacturing payrolls saw a big decline in September, falling 66,000 after a

117,000 job loss in August.

But the vast service-producing areas of the economy more than picked up the

slack.

Average hourly earnings, a gauge of wage inflation, rose a modest 0.2 per

cent in September versus Wall Street forecasts for a 0.3 per cent rise. The

length of the average workweek for private-sector employees rose to 34.4 hours

from 34.3 in August.

(C) Reuters Limited 2000.