Weak Jobs Report Could Spur Fed to Action

By:: Kara Johnson | October 08, 2010

Employment fell by 95,000 jobs in September, as a modest rise in private-sector hiring was wiped out by layoffs of Census workers and by local governments, according to the latest figures from the Labor Department.

The figures were considerably worse than most economists expected, with a Bloomberg News survey predicting a decline of around 5,000. The unemployment rate remained unchanged at 9.6 percent.

The figures were driven by a loss of 159,000 government jobs, including 77,000 temporary Census workers. Only 6,000 temporary workers hired for the 2010 Census remain on government payrolls, down from a high of 564,000 in May.

Faced with tightening budgets, local governments let go 76,000 workers in September, with about two-thirds of them teachers and other education workers.

Private-sector employment increased by 64,000, but it was not enough to counter layoffs in the public sector.

The number of long-time unemployed, those who had been jobless for 27 weeks or more, remained essentially unchanged at 6.1 million, although down 640,000 from a peak of 6.8 million in May. Nearly 42 percent of all jobless in May had been unemployed for 27 weeks or more.

The weak jobs report makes it more likely that the Federal Reserve will take action to boost the economy, likely by purchasing government bonds or other measures designed to free up the flow of capital. Such a move could send mortgage rates even lower than their already record lows where they currently stand. On Thursday, Freddie Mac reported the average interest rate on 30-year fixed rate loan was 4.25 percent, the lowest in the four decades the agency has been reporting weekly mortgage rates.

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