- The Washington Times - Friday, October 3, 2003

The nation’s employers created 57,000 new jobs in September, ending eight months of job losses in what may be a turning point for the economy.

The addition of 88,000 jobs in construction and booming services businesses such as health care, finance, auto dealerships and temporary office work overwhelmed the loss of another 31,000 mining and manufacturing jobs, the Labor Department reported.

Since job growth has been the missing ingredient in the recovery since the recession ended in 2001, September’s small net job gain is the first tentative sign that the renewed vigor seen in consumer spending and other parts of the economy this past summer may be creating the kind of momentum that sustains a recovery, analysts said.

Hope that the job drought is finally ending stoked a powerful rally on Wall Street, with the dollar surging against other currencies and the Dow Jones Industrial Average jumping as much as 175 points before settling back to an 85-point gain. Stock indexes as far away as Frankfurt, Germany, and Milan, Italy, registered robust gains of 3 percent or more on hopes that the world’s largest economy is finally hitting its stride.

“This may signal that we’ve bottomed out at last and now are on the way back up,” said Bill Cheney, chief economist with John Hancock Financial Services Inc., noting that the jobless recovery has lasted much longer and been far more severe than anyone expected.

Companies seem to be getting to the point where they must add staff to accommodate the increase in sales and orders generated by record cash-out mortgage refinancings this past spring and a round of tax cuts this summer, he said.

But many more months of job growth will be needed to confirm that the economy has reached this critical turning point, he said.

“This is just one month of positive job growth, not enough to change the unemployment rate,” he said. Still, “one has to be hopeful that the jobless recovery is finally giving way to a healthy and sustainable expansion.”

At 6.1 percent, the unemployment rate in September was unchanged from August, and down from a peak of 6.4 percent in June. Joblessness in the Washington area, where employment has grown gradually by 15,000 in the past year as a result of booming housing and government spending, is nearly half the national rate at 3.3 percent, according to the D.C. Department of Employment Services.

President Bush, who stands to benefit if the job growth continues, celebrated the “positive signs” in yesterday’s report after meeting with small-business people in Milwaukee. But he added that “there’s a lot of work to do” before every American who wants a job gets one, especially for the 2.7 million manufacturing workers who have lost their jobs in the past three years.

Mr. Bush’s Democratic opponents, who had been reveling in month after month of dreary job news, questioned whether the improvement was big enough to signal a significant change for the nation’s 8 million job hunters.

“The Labor Department’s new unemployment numbers are like a 2-yard gain when what we really need is a touchdown,” said House Democratic Whip Steny H. Hoyer, Maryland Democrat. “This small gain is nothing to make you jump out of your seat with excitement. … We still need 3 million new jobs to make up for what has been lost under President Bush’s watch.”

The glimmer of hope for job seekers in yesterday’s report was tempered by a sharp drop in wage gains for the 94 percent of Americans who still are employed. The department said that yearly wage growth has fallen to 2.7 percent from 3.7 percent as recently as seven months ago.

Bearish analysts on Wall Street seized on the lost momentum in wage gains, along with the tepid pace of job growth and continued to question whether the recovery will be dynamic enough to endure.

“With scant job growth to underpin income gains and the alleged one-time benefits from lower taxes and refinancings gone, bears fear that the consumer party ended in September,” said Richard Berner, chief economist at Morgan Stanley.

“But I think there’s more to the consumer revival than a summer fling,” he said, noting that consumers will get another boost from tax refunds and rate reductions scheduled for early next year. Meanwhile, they continue to benefit every month from lower mortgage payments after refinancing.

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