Jobless rate holds steady after wave of government layoffs

A wave of government layoffs in September outpaced weak hiring in the private sector, pushing down the nation's payrolls by a net total of 95,000 jobs.

The U.S. unemployment rate held at 9.6 percent last month, the Labor Department said Friday. The jobless rate has now topped 9.5 percent for 14 straight months, the longest stretch since the 1930s.

The report is the final one before the November elections, which means members of Congress will face voters next month with an economy that is still struggling to create jobs.

The private sector added 64,000 positions, the weakest showing since June.

A net total of 159,000 government jobs were lost in September. Local governments cut 76,000 jobs last month, most of them teachers. That's the largest cut by local governments in 28 years. About 77,000 temporary federal census jobs ended and state governments shed 7,000 jobs.

The cuts reflect the toll the recession is taking on state and local government budgets. Falling home values are just beginning to push down local governments' property tax revenues. Most state and local governments are required to balance their budgets, which means drops in revenue are forcing cuts in services.

Nearly 14.8 million people were unemployed last month. That's almost 100,000 fewer than in August.

Including those who have given up looking for work, and those who were working part time but wanted full-time jobs, the so-called "underemployment" rate jumped to 17.1 percent last month from 16.7 percent in August. That reflected an increase of more than 600,000 involuntary part-time workers.

The weak job market makes it more likely that the Federal Reserve will take additional steps to boost the economy. Most economists expect the Fed to decide at its meeting next month to buy government debt in an effort to lower interest rates and spur more borrowing.

Even areas that were strong are weakening.

Manufacturers cut 6,000 jobs, the second straight month of losses. The sector drove job growth earlier this year, adding 134,000 positions in the first five months of 2010, but factory employment has been flat since then.

Construction firms cut another 21,000 jobs, hampered by weakness in commercial real estate development. Information services lost 5,000 positions.

Other sectors showed job gains: Health care added 32,000 jobs, the leisure and hospitality sector added 38,000, and retailers added 5,700. Temporary help services hired nearly 17,000 workers.

Employers, faced with slow sales and a weak economy, see little reason to ramp up hiring. The economy expanded at a feeble 1.7 percent annual rate in the April-June quarter. Most analysts think the economy will fare little better for the rest of this year.

Since the recession ended in June 2009, the economy has grown 3 percent, according to economists at Deutsche Bank. That's less than half the average 6.5 percent pace in postwar recoveries.