By  on October 10, 2005

WASHINGTON — U.S. employers cut payrolls by 35,000 jobs in September after the devastation of Hurricane Katrina, less than the 150,000 anticipated by economists but still viewed as potentially damaging to consumer spending.

The unemployment rate rose to 5.1 percent from a four-year low of 4.9 percent in August, according to the Labor Department. The drop in payrolls followed a gain of 211,000 jobs in August.

"Even though the estimates are much better than anticipated, they're still going to reinforce some of that consumer thinking about where the job market is and very likely result in less consumer spending than would have otherwise been the case," said Ken Goldstein, an economist with The Conference Board.

Goldstein predicted another job loss in October and small gains for the balance of the year.

"The bottom line is, one, this is not the end of it and, two, even though the number was much better than anticipated, don't expect any quick turnaround," he said.

The consumer's mood will most immediately impact stores, which contributed to September's decline in employment. Apparel and accessories retailers shed 27,500 workers last month to employ 1.4 million, after holding employment steady in August. Employment at general merchandise stores fell by 7,300 workers to 2.9 million. Within this group, department store payrolls shrunk by 4,400 to 1.6 million.

Job cuts in retail and other sectors, including leisure and hospitality, overwhelmed gains in areas such as business services, health care and construction.

The employment report, however, brought a bit of hope for U.S. apparel and textile producers in the form of a revision that added 3,000 jobs to the August count, said Charles McMillion, president and chief economist at MBG Information Services.

Still, September showed a continuation of the decade-long trend of workforce cuts, with 1,400 job losses at apparel manufacturers to 253,900, and a drop of 300 at textile mills to 221,400. Textile product mills managed an uptick of 800 workers to 178,700.

"All things considered, quite a good report for the textile and apparel industry," McMillion said. "Employers are waiting to see what's going to happen with the various measures on imports, with the storm [impact] and with consumer demand. There's a lot of question about constraints on imports from China."

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