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Premature Release of Poor Jobs Data on Internet Spooks Markets

By Jonathan Peterson
Los Angeles Times

In a miscue that echoed through the financial world Thursday, government officials released October jobs data on the Internet a day ahead of schedule, revealing a disappointing gain of 116,000 jobs and a U.S. unemployment rate holding steady at 4.6 percent.

The premature disclosure quickly pushed down interest rates and stock prices, but not for long. Soon afterward, Federal Reserve Chairman Alan Greenspan told a Florida audience that "we are already seeing significant signs" of improvement within the shaken global financial system.

Greenspan's remarks, along with a bullish report on October retail sales, triggered a reversal of sentiment, and the stock market rocketed as the bond market stabilized. The Dow Jones industrial average gained 132.33 points to close at 8,915.47, its loftiest perch since late July.

Analysts also interpreted the October jobs totals as increasing the likelihood that the Federal Reserve would reduce interest rates, either at the Nov. 17 meeting of its policy committee or shortly afterward, in its campaign to prevent the economy from slipping into recession.

"The economy is not falling apart by any means," said Joel L. Naroff, senior vice president and chief bank economist at First Union Corp. in Philadelphia. "That's really the key to this (jobs) report."

At the same time, the gain of 116,000 payroll jobs was significantly weaker than the 180,000 increase that had been widely forecast. "The market said it really isn't that bad, but if the Fed is going to ease that's good for us," Naroff said.

The jobs report illustrated the ongoing problems suffered by U.S. manufacturers in the wake of Asia's financial debacle. Manufacturing employment declined by 52,000 jobs, the seventh decline in nine months. Retail employment reportedly fell by 10,000 jobs, although some analysts questioned the accuracy of that finding. A principal winner was business services, where payroll jobs increased by 58,000 last month.

Also Thursday, Labor Department officials said the economy had gained many more jobs in September than previously thought. The September increase was revised upward to 157,000 from an earlier estimate of 69,000.

Though the unemployment rate remains low by historical standards, it is up significantly from the 4.3 percent low point reached last spring.

"Job growth is softening," said economist Oscar Gonzalez of John Hancock in Boston. But, he said, "considering that we are carrying the global economy on our shoulders, we are still running pretty fast."

For his part, Greenspan offered a non-alarmist assessment of the global financial situation. In a speech to investors in Boca Raton, Fla., he suggested that the climate had improved somewhat from the chaotic fears that shook the financial world following Russia's botched devaluation of the ruble in August and signs that the panic would leap to Latin America.

"It is of course plausible that the current episode of investor fright will dissipate," he said. "Indeed we are already seeing significant signs of some reversals."

But Greenspan, making clear that he did not consider the crisis over, added that the United States and other wealthy nations faced an unfinished job of helping weaker economies survive.