Snap analysis: Payroll improvement eases recession risks

By Jason Lange

WASHINGTON (Reuters) - Job creation accelerated more than expected in September, easing the risk of a new recession, although the economy still created too few positions to heal the labor market much.

The U.S. economy generated 103,000 new jobs last month, beating Wall Street's low expectations for 60,000 jobs.

The pace of hiring improved substantially from August, when the spending battle in Congress nearly left the government unable to pay its bills, damaging consumer and business sentiment. The stronger-than-expected reading for September suggests the political fight may have only temporarily damaged hiring.

Still, the numbers show the labor market remains weak and suggest the unemployment rate will likely remain elevated for a long time. Many economists estimate the economy needs to create 100,000 jobs every month, or more, just to keep up with a growing population.

The September unemployment rate, which is derived from a different survey than the payroll data, held steady at 9.1 percent even as more workers poured into the labor force.

The payroll reading also received a one-time boost as some 45,000 workers returned to work after a strike at Verizon Communications Inc.

While suggesting the U.S. economy will dodge recession, the report does little to take the pressure off the U.S. Federal Reserve and President Barack Obama to find ways to spur stronger hiring.

Fed Chairman Ben Bernanke unveiled new stimulus measures in September to lower interest rates and help the housing market, but economists don't expect them to accomplish much, while a jobs package proposed by Obama faces uncertain prospects on Capitol Hill.

Following are key details from the Labor Department figures:

(Editing by Padraic Cassidy)

(This story corrects the next to last bullet point to clarify temporary help employment rose by 19,400, an increase that was 900 positions below the gain seen in August)