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Unemployment rate stays at 9.6 percent

Economy lost overall 95,000 jobs in September due to government layoffs

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The nation's businesses created another 64,000 jobs last month -- adding to a string of steady gains this year that has been welcome for job-hunters but not strong enough to draw down the unemployment rate.

Unemployment stayed at 9.6 percent, in a range where it has been stuck most of the year, the Labor Department reported Friday morning. 

The gains in private jobs came mostly in health care, restaurants, mining and temporary employment, and were more than offset by another month of losses in government jobs.

A 159,000 drop in government jobs led to an overall 95,000 fall in employment during the month. It reflected a widely expected decline of 77,000 federal workers hired temporarily to conduct the census, as well as an unexpectedly large fall of 83,000 in state and local employment.

States and cities, hemorrhaging revenues as a result of the recession and running out of federal stimulus funds, laid off workers in every category from teachers to police and firefighters, in the largest such layoffs since 1982, the department said.

The workweek and average hourly wages were mostly unchanged during the month, leaving the average worker with a scant gain of 1.7 percent in earnings in the last year.

"The pace of job creation is more than disappointing," said Harm Bandholz, economist at Unicredit Markets. "The woes of state and local governments are weighing on the labor market" as fewer teachers were called back to work this fall.

The only good news, he said, is that the large wave of layoffs of temporary workers since the April census is now mostly over. 

"It's a sideways economy," said John Silvia, chief economist at Wells Fargo Securities. The tepid jobs performance is sure to be disappointing not only for the nearly 16 million unemployed workers but also for legislators running for re-election next month, he said.

Moreover, the jobs market was worse in the last year than previously reported by the department. It said 15,000 more jobs were lost in July and August than it previously estimated, and it expects the department's annual revisions to show the economy lost another 366,000 jobs through March 2010.
"The economy is no better, no worse," said Heidi Shierholz, economist at the Economic Policy Institute. "American workers are still in hell."

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