Tracking the Economy: Business Hiring Data Hint at a Slowing --- But Drop in Unemployment To 5.4% Rate Indicates Economy Is Still Healthy
WASHINGTON -- Sluggish business hiring in September suggests the economy is growing a bit more slowly, although the drop in the civilian unemployment rate to 5.4% is a reminder that the economy is still very healthy.</br></br>The Labor Department's employment report was viewed by many economists as convincing evidence that earlier fears of an overheating economy were misplaced. "The economy is slowing, not dramatically, but there is some modest slowing," said John Hagens of WEFA Group, a Bala Cynwyd, Pa., forecasting firm.</br></br>Still, there were enough conflicting signals in the report to allow Republicans to celebrate the continued health of the economy while Wall Street concluded that growth is tapering off and, therefore, that inflation and sharply higher interest rates aren't as much of a threat.</br></br>Investors displayed their relief by pushing up stock and bond prices sharply, allowing interest rates on long-term Treasury bonds to fall to the lowest level in nearly six months. The Dow Jones Industrial Average rose 42.50 points, closing at 2150.25. "The market read it correctly," said Milton Hudson, economist for Morgan Guaranty Trust Co. of New York. "I think we're headed for a soft landing. This gives us a glimmer of hope."</br></br>The Labor Department said non-farm payrolls grew by 255,000 in September. Ordinarily, that would be considered strong growth, but much of the September increase reflects greater-than-usual hiring by public schools at the beginning of the school year. Businesses added only 140,000 jobs, and factory payrolls fell for the second month in a row. In the past three months, the economy has added 638,000 new jobs compared with more than one million in each of the three preceding quarters.