Bad news: Jobs market getting worse

[Watchman]

Bad news: Jobs market getting worse
More jobs were lost in September than expected and unemployment rate hits 26-year high of 9.8%.



Last Updated: October 2, 2009: 4:19 PM ET

NEW YORK (CNNMoney.com) -- Employers cut more jobs from their payrolls in September and the unemployment rate hit another 26-year high, as the long-battered U.S. labor market took an unexpected turn for the worse, according to a government report Friday.

The Labor Department said there was a net loss of 263,000 jobs in the month, up from a revised loss of 201,000 jobs in August. Economists surveyed by Briefing.com had forecast losses would fall to 175,000 jobs.

This is only the second time this year that job losses rose from the previous month, as the labor market had shown slow but relatively steady improvement since a loss of 741,000 jobs in January.

September marked the 21st consecutive month that the number of workers on payrolls has shrunk, a period during which 7.2 million jobs have been lost.

Even though many economists, including those at the Federal Reserve, have said there are signs that the economy is growing once again, Friday's jobs report shows that job losses could continue well into the recovery, limiting the strength of any economic turnaround.

"This report is dismal and disappointing," said Sung Won Sohn, economics professor at Cal State University Channel Islands. "The 'green shoots' in the economy are withering. Technically, the economy may have bottomed, but the job market is lagging behind and struggling."

U.S. stocks fell in early trading following the report and closed the day slightly lower.

The unemployment rate rose to 9.8% in September from 9.7% in August. That was in line with economists' forecasts, but the unemployment rate is now the highest since June 1983.

Speaking to reporters, President Obama called the report a "sobering reminder that progress comes in fits and starts.

"I've made the point that employment is often the last thing to come back after a recession, and that's what history shows us," Obama said. "But our task is to do everything we can possibly do to accelerate that process."

The average work week also fell to a record low of 33 hours, down from 33.1 hours in August. In addition, the number of workers who want full-time jobs who are only able to find part-time work rose to a record 9.2 million.

Counting these involuntary part-time workers and those without work who have stopped looking for jobs and are not counted in the unemployment rate, the so-called underemployment rate rose to 17%, the highest reading in the 16 years it's been calculated.