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Last Updated: Friday, 7 October 2005, 15:39 GMT 16:39 UK
US sheds jobs in wake of Katrina
Worker at Chrysler factory in Detroit
Analysts had predicted that more jobs would go
The number of people in work in the US declined in September for the first time in more than two years, with 35,000 jobs being lost.

Month-on-month US unemployment rose from 4.9% to 5.1%, according to official Labor Department figures.

Job creation in some areas was more than offset by layoffs caused by the impact of Hurricane Katrina.

However, Wall Street economists had forecast a bigger drop in employment.

Analysts had expected job growth to turn negative - and had also expected 143,000 jobs would be lost.

Experts added that increased more people being taking on in unexpected areas such as business services, temporary help and government employment had helped offset the rise in jobless numbers.

"The bottom line - despite the minus sign in front of the number, (payrolls) are a lot better than we thought," Chris Low, chief economist at FTN Financial said.

Disappointment

September was the first month since May 2003 that saw job losses rather than gains.

(This) shows perhaps the economy was not as severely affected by the hurricanes as initially anticipated
Jason Schenker, Wachovia Bank
The US Labor Department indicated that if Hurricane Katrina had not struck the Gulf Coast in late August, job creation would probably have matched the 2005 monthly average of 194,000.

Collection of the figures was disrupted by the impact of Hurricane Rita, which hit during late September, but the effect of that storm will not be known until next month's figures emerge.

The department also revised its figures for the previous two months sharply upwards.

It said 211,000 jobs were created in August, rather than 169,000 initially stated. In July, there were 277,000 new jobs instead of 242,000.

"What we're seeing is a lot stronger numbers than were anticipated, also with an upward revision in August and July. All of this bodes well for the economy and shows perhaps the economy was not as severely affected by the hurricanes as initially anticipated," said Jason Schenker, an economist with Wachovia Bank.

Experts also warned that the better-than-expected figures could make it more likely that the Federal Reserve Bank would continue to raise rates for longer than previously thought.

Interest rates have been raised from 1% to 4.25% in an attempt to cool the economy and prevent future inflation.

Disruption

After Katrina struck New Orleans and the Gulf Coast region, thousands of people were forced to flee their homes.

Many also lost their jobs as businesses such as casinos, tourism and oil refineries were destroyed or disrupted.

Over 80,000 were employed in the tourism industry in New Orleans, and the floating casinos on the Gulf Coast employed an additional 14,000 people.

And 107,000 jobs were linked to the port of New Orleans, which is still only operating at 25% of capacity.

The City of New Orleans itself recently announced it had been forced to lay-off thousands of city workers following the financial dislocation caused by the storm.

Full details of the regional extent of job losses are not yet known, but weekly job claim figures suggest that over 200,000 workers have applied for temporary benefits.


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