Strong job growth eases recession fears

By Glenn Somerville

WASHINGTON (Reuters) - U.S. employers added 110,000 jobs in September and August's job losses were revised into a gain in a Labor Department report on Friday that lifted some worry about a recession in the near term.

But analysts said the data still showed a modest pace of job growth able to support only a less-than-robust economic expansion, which meant the Federal Reserve may be compelled to lower interest rates further to add stimulus to the economy.

"Job gains starting in the spring have not been particularly good," said economist Joel Naroff of Naroff Economic Advisors Inc. in Holland, Pennsylvania. "They have continued at a pace that is enough to keep the economy out of recession, but not enough to generate strong growth."

The department said 89,000 jobs were created in August, rather than the 4,000 that it originally reported were lost. It also said 93,000 jobs were created in July instead of 68,000 it previously reported -- a total of 118,000 more jobs in the July-August period than it had earlier estimated.

That averaged out to about 97,000 jobs a month during the third quarter, down from 126,000 in the preceding quarter. The monthly unemployment rate -- compiled from a separate survey -- edged up to 4.7 percent from 4.6 percent in August.

VIBRANT, OR NOT?

U.S. President George W. Bush said the figures signaled "a vibrant economy" but a poll of top Wall Street economists found more than half still think the Fed will trim rates again this month to help the economy get past a housing slump and a surge in mortgage defaults.

The poll showed 10 out of 18 primary dealers -- big firms that deal directly with the Fed -- expect U.S. central bank policy-makers to reduce the benchmark federal funds rate a quarter percentage point at the end of an October 30-31 meeting.