171,000 more work, but jobless rate up
WASHINGTON — U.S. employers added 171,000 jobs in October, and hiring was stronger in August and September than first thought. The solid job growth showed that the economy is strengthening slowly but consistently, economists said.
The unemployment rate rose to 7.9 percent from 7.8 percent in September, another Labor Department report said. That was mainly because many more people began looking for work, and not all of them found jobs. The government counts people without jobs as unemployed only if they’re looking for work.
“Generally, the report shows that things are better than we’d expected and certainly better than we’d thought a few months ago,” said Paul Dales, senior U.S. economist for Capital Economics. “But we’re still not making enough progress to bring that unemployment rate down significantly and rapidly.”
Since July, the economy has created an average of 173,000 jobs a month. That’s up from 67,000 a month from April through June. Still, President Barack Obama faces voters next week with the highest unemployment rate of any incumbent since Franklin Roosevelt and slightly higher than the 7.8 percent on Inauguration Day.
The work force — the number of people either working or looking for work — rose by 578,000 in October. And 410,000 more people said they were employed. The difference is the reason the unemployment rate rose slightly.
“This is good news because we had gone through a long period where people were giving up and dropping out of the labor market,” said Ward McCarthy, chief financial economist at Jefferies & Co. Inc. in New York. “People are feeling a bit more chipper about the labor market.”
The influx of people seeking jobs “could be a sign that people are starting to see better job prospects and so
should be read as another positive aspect to the report,” said Julia Coronado, an economist at BNP Paribas.
Friday’s report included a few encouraging details.
The government revised its data to show that 84,000 more jobs were added in August and September than previously estimated. August’s job gains were revised from 142,000 to 192,000, September’s from 114,000 to 148,000.
The unemployment rate has fallen a full percentage point in the past 12 months. Much of that decline occurred because people gave up looking for work. That pushed the percentage of Americans working or looking for work to 63.5 percent in August, a 31-year low.
But since then, more Americans have started or resumed their job hunts and most have found work. The percentage of Americans working or looking for work rose for a second straight month in October to 63.8 percent.
The number of people with part-time jobs who wanted full-time work dropped last month. And the number of discouraged workers also declined. A measure of unemployment that includes those two groups plus the unemployed dipped to 14.6 percent from 14.7 percent.
The economy has added jobs for 25 straight months. There are now 580,000 more than when Obama took office.
But there were also signs of the economy’s persistent weakness. Average hourly pay dipped a penny to $23.58. In the past year, average hourly pay for most workers rose only 1.1 percent.
That’s the smallest annual gain on records dating back to 1965.
Because more people sought jobs than found one, the number of unemployed rose 170,000 to 12.3 million. That pushed up the unemployment rate.
Job gains were spread broadly across most industries. Businesses added 184,000 jobs in October, the
“Jobs are expanding despite all this expression of business caution. You continue to see improvements in people’s perceptions of what’s happening in the job market.” — Maury Harris, chief economist at UBS Securities LLC in New York
most in eight months. Government overall cut 13,000 jobs.
The housing recovery is finally generating jobs. Construction companies added 17,000 jobs, the most since January. Manufacturers added 13,000 jobs after shedding 27,000 in the previous two months.
Professional services such as architects and computer systems providers also added jobs. So did retailers, hotels and restaurants, and health care.
The economy has shown many signs of picking up a bit. Americans are buying more high-cost items, such as cars and appliances. Auto companies reported steady sales gains last month despite losing three days of business to the storm in heavily populated areas of the Northeast.
Yet businesses remain nervous about the economy’s future course. Many are concerned that Congress will fail to reach a budget deal before January.
American companies are also nervous about the economic outlook overseas. Europe’s financial crisis has pushed much of that region into recession and cut into U.S. exports and corporate profits.
“Jobs are expanding despite all this expression of business caution,” said Maury Harris, chief economist at UBS Securities LLC in New York. “You continue to see improvements in people’s perceptions of what’s happening in the job market.”
The weak global economy and the so-called fiscal cliff — more than $600 billion of tax increases and budget cuts scheduled to take effect next year unless Congress acts — have prompted some companies to begin cutting back.
Unless the cliff is averted, “it’s going to be a major hit to consumer spending that could knock the economy back into recession,” said Stuart Hoffman, chief economist at PNC Financial Services Group Inc. in Pittsburgh.
“So we still have that dark cloud hanging over the economy,” he said. “If that cloud is cleared up a little bit, and I expect it will be, then yes, I think these gains can be sustained.”