WASHINGTON - Private nonfarm payrolls increased by 64,000 in September while total nonfarm payrolls fell 95,000 due to the Census drawdown and the largest monthly decline local government payrolls in 28 years, the Labor Department reported Friday. The unemployment rate remained at 9.6%.
The preliminary annual benchmark revision showed a decline of 366,000 workers, as private-sector jobs fell by 371,000, while public-sector employment rose by 5,000.
Nonfarm payrolls were revised lower for August and July to losses of 57,000 and 66,000 respectively.
Economists expected total nonfarm payrolls to be flat for the month and for private payrolls to increase by 75,000, according to the median estimate from Thomson Reuters. The economists also saw the unemployment rate rising to 9.7%.
Census payrolls fell by 77,000 in September and only 6,000 workers remain on the federal government payroll for the Census.
Local government payrolls fell by 76,000, including a 49,800 drop in education. It was the largest drop in local government payrolls since July 1982.
Manufacturing payrolls fell by 6,000 following a 28,000 decline in August. It was the first back-to-back decline in manufacturing payrolls since November and December 2009.
The average hourly earnings for private-sector production and nonsupervisory employees increased by 0.1%. The average workweek remained unchanged at 33.5 hours.
Below estimate employment figures “might heighten the urgency” of quantitative easing, John Lonski, chief economist at Moody’s Capital Markets Group, said on Wednesday. If equity markets sell off on the news, the Fed’s Treasury purchases “would begin immediately,” he said. “I don’t think you want to waste any time.”
The Federal Reserve bought long-term Treasuries from March to October 2009. As of Sept. 22, the Fed held $353 billion of Treasury debt as part of its $2.04 trillion of assets.
The Fed’s quantitative easing “might be a positive development for munis both by lowering the absolute level of municipal bond yields and then by eventually narrowing the spread” between municipal and Treasury bond yields, Lonski said.
Justin Hoogendoorn, managing director at BMO Capital Markets in Chicago, said Wednesday that quantitative easing “will have a much lesser effect on munis that it will have on the Treasury market.”
If the Fed buys Treasuries and the Build America Bond program is not extended, then “we could see some real pressure” on longer-dated munis, he said.
