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Local News

October 27, 2013

Hiring likely tied to mood of economy

WASHINGTON — The uncertainty and weakness that hung over the U.S. job market in September before the government shut down aren’t going away.

Employers will likely remain slow to hire as long as the economy struggles to accelerate, consumers limit their spending and Congress keeps putting off a resolution to a budget fight that will resurface early next year.

Just a few months ago, many economists predicted that hiring would pick up by year’s end as the effects of tax increases and government spending cuts that kicked in this year faded.

No longer. The September jobs report made clear that hiring isn’t strengthening. It’s slowing.

Employers last month added 148,000 jobs, a steep drop from the 193,000 gained in August. From January through March, job growth averaged 207,000 jobs a month. For April through June, the average was 182,000. For July through September, it was just 143,000.

“We had assumed that the headwinds would dissipate, but in fact they didn’t,” says Doug Handler, an economist at IHS Global Insight.

What’s more, the 16-day partial shutdown of the government, which began Oct. 1, will likely further depress hiring for October. That’s because government contractors and other companies affected by the shutdown imposed temporary layoffs.

And the budget battles that led to the shutdown are likely to flare up later this year and in early 2014. Last week, Congress agreed to keep the government running only until Jan. 15 while President Barack Obama and Congress seek a broader budget agreement.

Waiting on Congress

In the meantime, uncertainty about another budget impasse — and potentially another government shutdown — may cause some businesses to hold off on hiring or expanding.

“Companies are not feeling confident enough to expand, to hire, to invest,” said Yelena Shulyatyeva, an economist at BNP Paribas. “They’re just sitting on the sidelines, being cautious, and watching all these headlines from Washington.”

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