US economy sheds more jobs

The US economy shed 95,000 jobs in September despite predictions that overall payrolls would remain unchanged, the labour department has said.

Government payrolls fell by a larger than expected 159,000 while private-sector employment, a better gauge of the labour market health, increased by 64,000, the department reported on Friday.

The unemployment rate remains unchanged at 9.6 per cent.

Analysts had initially expected a smaller loss of government jobs and a greater rise in the number of private work placements.

At least 100,000 jobs need to be created each month to put the labour market on firm footing, according to analysts.

“While economic growth is expected to remain positive, the pace of growth over the next year and a half is not likely to be sufficient to meaningfully improve the unemployment rate from its currently elevated level,” James Marple, an economist at TD Bank, was quoted by the AFP news agency.

“Moreover, even as growth picks up, discouraged workers will begin to re-enter the workforce, putting upward pressure on labour force growth and slowing improvement in the unemployment rate.”

The closely watched report may offer clues on whether the struggling economy is sinking back towards recession or moving toward a sustained recovery.

It is also the last monthly labour market snapshot ahead of the mid-term elections on November 2.

The September reading marked the 17th consecutive month the jobless rate has been at or above 9.4 per cent and was the fourth consecutive month that the economy shed jobs.

Barack Obama, the US president, and his Democratic Party  need a strong report to show economic progress is being made ahead of the elections.

The opposition Republicans are expected to make strong gains and possibly recapture a majority in one or both chambers of Congress.