U.S. Economy Sheds Fewer Jobs Than Expected

The Labor Department's unemployment report for September shows a smaller than expected number of job losses from Hurricane Katrina. Even so, unemployment rises to 5.1 percent. But analysts say numbers from October will give a better indication of Katrina's impact on the job market.

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From NPR News, this is ALL THINGS CONSIDERED. I'm Robert Siegel.

For the first time in more than two years, the US economy has lost jobs. Several hundred thousand jobs along the Gulf Coast disappeared last month, and that has had a big impact on the overall employment picture. The Labor Department reports today that around the country, the number of jobs on business payrolls dropped by 35,000, but that was much lower than what most economists had feared. We'll hear about the situation in New Orleans in a few minutes from reporter John Ydstie. First, here's NPR's Frank Langfitt with the big picture.

FRANK LANGFITT reporting:

Economists expected that Katrina would cut the nation's labor force by about 150,000 jobs in September, but so far growth around the rest of the country appears to have offset most of the losses along the Gulf Coast. Stuart Hoffman is chief economist at PNC Financial in Pittsburgh.

Mr. STUART HOFFMAN (Chief Economist, PNC Financial): And what it says--and these are very preliminary data--is that certainly, the Gulf area was devastated and many, many people lost jobs. But the good news appears to be in the other 47 states across the country, the job market continues to be fairly strong.

LANGFITT: This month's report provides the broadest gauge yet of the hurricane's impact on employment. Sectors big along the Gulf Coast, like tourism and entertainment, were among the hardest hit; 80,000 jobs were lost in the leisure and hospitality industry alone. But employment losses could have been worse. Some companies are taking a long view. John Silvia is chief economist at Wachovia Bank.

Mr. JOHN SILVIA (Chief Economist, Wachovia Bank): Many, many large US companies having facilities in that Gulf area simply said, `This is only a temporary glitch. We're certainly not going to let good workers go; we're going to keep them employed, keep them paid.'

LANGFITT: The Labor Department says that prior to Katrina, job growth was even stronger than thought. Revised numbers show the nation produced nearly half a million jobs in July and August.

So far Katrina appears to have knocked more than 300,000 people out of work, government figures show. Some of those jobs will never come back. Robert Muldowner(ph) owns a camera store in New Orleans that employed six people; flooding destroyed most of his equipment. Muldowner says if he reopens, he'll probably be on his own.

Mr. ROBERT MULDOWNER (New Orleans Business Owner): I would have to reinvent it. I don't necessarily think that I would be a retail camera store anymore. I mean, I'll be a one-person place. It won't be any jobs, so there's, you know, five jobs that will not get replaced.

LANGFITT: Katrina scattered people across the country, presenting huge problems for those trying to count lost jobs. So last month, the Bureau of Labor Statistics, or BLS, used new techniques. If a business did not respond to its survey, officials went online to see whether it was still paying employees. Chris Carbone is an economist at the bureau.

Mr. CHRIS CARBONE (Bureau of Labor Statistics): This is a first for BLS. The actual impact and the scale of this disaster is so much greater than we've seen from anything else.

LANGFITT: The Gulf Coast has just a tiny percentage of the nation's total jobs, and Silvia of Wachovia Bank thinks that's one reason the country's labor market may rebound fairly quickly.

Mr. SILVIA: The numbers for the next three to six months will be below average. However, a year from now we'll probably see good, solid employment numbers.

LANGFITT: The report did show the unemployment rate rising to 5.1 percent. Analysts think one reason may be the summer's strong labor market. Healthy markets sometimes attract many more job-seekers than they can actually absorb, and the result can be a higher unemployment rate. Frank Langfitt, NPR News.

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