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The Honolulu Advertiser
Posted on: Saturday, October 8, 2005

Katrina job losses less than expected

By Joel Havemann
Los Angeles Times

WASHINGTON — The government's first formal look at Hurricane Katrina's impact on national employment showed far less damage than many analysts had feared.

The Labor Department reported yesterday that the economy lost a net 35,000 jobs in September, far fewer than the widely predicted decline of 150,000 to 200,000. The unemployment rate rose to 5.1 percent from 4.9 percent, still lower than it has been for any full year since 2001.

"I was pleasantly shocked. I was expecting job losses of 200,000," said Gary Burnison, chief operating officer of Korn/Ferry International, a Los Angeles-based executive search company. "The economy is obviously in good shape."

The jobs lost in September were more than offset by an upward revision of 77,000 jobs for July and August. Nonetheless, the latest drop was the first monthly job loss since May 2003.

More complete information, coupled with Rita's effect, might show a gloomier jobs picture in subsequent months, analysts said.

Both hurricanes hobbled important oil and gas facilities along the Gulf Coast, pushing energy prices even higher.

The September job data all but guarantee that the Federal Reserve will stick to its course of raising short-term interest rate by 0.25 percentage point at each of the eight annual meetings of its Federal Open Market Committee. After Katrina, there was speculation that the Fed might pause in case the economy slowed, economists agreed.