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Modest job growth continues, ADP says, but shutdown likely to create headwinds

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Private employers added 166,000 jobs in September, according to Roseland-based payroll company ADP, a level consistent with modest economic recovery — though economists say policy uncertainty and political infighting are clouding future business plans.

Economist James Hughes, dean at the Edward J. Bloustein School of Planning and Public Policy at Rutgers University, said growth has cooled the past few months, reflecting a "dysfunction" in Washington, D.C., that perpetuates uncertainty among employers.

Hughes said the partial government shutdown beginning this week adds to confusion stemming from the rollout of the new health care law, whose ramifications are still unclear as employer decide whether it make senses to hire full or part-time employees.

"Companies are holding back on hiring decisions," Hughes said. "Office construction hasn't bounced back as quickly as the residential side."

The ADP report today also revised down its August report to 159,000 jobs, down from an initial 176,000 jobs. Hughes said the current pace projects the country to add about 2 million jobs this year, slightly below 2011 and 2012 levels.

"That's enough to keep the unemployment rate declining, but we're still a long way off from where it should be," Hughes said.

Unless the government reopens, the ADP report will provide the only national signal about job market health this week. The federal Bureau of Labor Statistics was scheduled Friday to release September unemployment and payroll figures.

The August national unemployment was 7.3 percent, better than New Jersey's average of 8.5 percent. Hughes said the New Jersey job market, though broadly mirroring national trends, lags the country because the state has missed the manufacturing rebound elsewhere in the United States, particularly driven by the auto industry in Midwest.

Other headwinds include a slow recovery from Hurricane Sandy, which Hughes said led to a weaker summer at the Shore. Plus, the stalling of New Jersey's population level has tapered housing construction and related growth of services jobs seen in other states, he said.

"We're also not getting the retail growth you would see on average throughout the country," Hughes said. "We're pretty much overstored in that regard."

Nationwide, service producers led the way in September, adding 147,000 jobs. Mark Zandi, chief economist at Moody's Analytics, who produces the report with ADP, said growth may be softening there as rising interest rates reduced mortgage refinancing applications and dampened growth in financial services.

Otherwise, Zandi said, the job market has been resilient considering headwinds.

Looking ahead, Hughes and Zandi each said the partial government shutdown will hurt the economy if it lingers for weeks, a trend bound to rattle the financial markets.

"As soon as people start to lose money, they are going to scream very loudly, and that will put a fire under lawmakers," Zandi said.

If no deal is struck by Oct. 17, the government would breach on its debt limit. Treasury Secretary Jack Lew said in a letter today to House Speaker John Boehner that if legislators can't hammer out an agreement by then, the federal government would only have about $30 billion cash on hand — not enough to meet daily expenditures, which can run as high as $60 billion a day.

"That's going to open an economic Pandora's box that's going to be pretty hard to put back together again," Zandi said. "That will do significant economic damage, almost immediately."

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