The economy lost 159,000 jobs last month as the onset of a severe credit crisis deepened recessions in housing, manufacturing, retail and other sectors, the Labor Department reported this morning.
The September job cuts were three times the rate seen in previous months this year, signaling that the economy has veered into a significant downturn. The drop in jobs was seen in every major sector except health, education, mining and government, but even those normally robust sectors experienced weak job growth of 34,000 last month.
The financial industry cut 17,000 jobs last month as workers were laid off from Wall Street to the West Coast, where two banks were closed down in recent weeks. Since the beginning of the year, the economy has lost a total of 760,000 jobs in all industries.
The unemployment rate held steady at 6.1 percent as 121,000 workers -- likely discouraged from finding jobs -- left the labor force, the department said. The average workweek also declined by 0.1 hour, with the combination of fewer hours and job cuts resulting in a rare decline of 80 cents in average weekly wages to $610.51.
The jobs report shows "the full weight of the banking crisis, the cost of imported oil and job losses to China bore down on manufacturing and the broader economy with unrelenting pressure," said Peter Morici, business professor at the University of Maryland. He said the report signals that the economy is now contracting in nearly every sector. "Overall growth should be near zero in the third quarter, and turn negative in the fourth quarter and first quarter of next year."
On Wall Street, the gloomy employment news caused an upturn in stock futures index as investors bet that it will force the Federal Reserve to slash interest rates soon to aid the economy.