Friday’s U.S. employment report came in weak as expected this morning, although more jobs were lost, the unemployment rate remained flat.

The U.S. economy shed a greater-than-expected 199,000 jobs in September, the largest drop since April 1991. Although, as with the Canadian numbers, the data does not include the full impact of the terrorist attacks, which occurred on the Tuesday of the survey week. There was widespread weakness, much of it in service industries, with some continued losses in manufacturing.

The unemployment rate held steady at 4.9%, and some were expecting it to pop into the plus 5% range. Aggregate hours worked fell for the fourth straight month. “Thus, a negative third quarter GDP was almost assured even before the attacks,” says BMO Nesbitt Burns. “In manufacturing, hours worked fell for the eighth straight month. The 1.2% decline brings the quarterly slump to 2.5%, a pace consistent with past recessions.”

BMO concludes that, “the slump in payrolls reflects firms recognising that hiring during the boom went too far and that job cuts are required in order to reduce costs and restore profitability. These cuts thus represent the onset of aggressive private-sector efforts to deal with the slowdown.”