BLBG: Payrolls in U.S. Climbed More Than Forecast in October
Hiring in the U.S. increased more than forecast in October as employers looked past slowing global growth and political gridlock at home.
In the last jobs report before next week’s election, a net 171,000 workers were added to payrolls after a 148,000 gain in September that was more than first estimated, Labor Department figures showed today in Washington. The increase exceeded the most optimistic forecast in the Bloomberg survey in which the median called for an advance of 125,000. Unemployment rose to 7.9 percent as more people entered the labor force.
Stock-index futures rose as faster job growth helped explain gains in consumer sentiment, laying the groundwork for a pickup in purchases that’s helping sustain the expansion in the wake of a weakening global economy. Americans go to the polls on Nov. 6 to decide whether to give President Barack Obama another four years or change course with Republican challenger Mitt Romney.
“The labor market is taking baby steps forward,” Scott Anderson, chief economist at Bank of the West in San Francisco, said before the report. “The fact that consumers are spending again has been an important support. Consumers pull a lot of weight, so more spending can lead to job creation.”
The contract on the Standard & Poor’s 500 Index expiring in December rose 0.5 percent to 1,430 at 8:34 a.m. in New York. The yield on the benchmark 10-year Treasury note increased to 1.76 percent from 1.73 percent late yesterday.
Retail Hiring
The report showed retailers added the most workers to payrolls since April 2011. A strengthening in the housing market helped drive a gain in construction employment, while payrolls increases were also noted in business services, manufacturing and leisure and hospitality.
At the same time, average hourly earnings climbed 1.6 percent in October from a year earlier, the smallest gain since comparable records back to at least 2007, today’s report showed.
Payrolls forecasts ranged from gains of 30,000 to 154,000 following an initially reported 114,000 increase in September. Revisions to prior reports added a total of 84,000 jobs to the employment count in the previous two months.
Private payrolls, which exclude government agencies, climbed by 184,000 last month, the most since February. They were projected to advance by 123,000, the survey showed.
The unemployment rate, which rose from 7.8 percent in September, matched the Bloomberg survey median. Estimates ranged from 7.7 percent to 8 percent.
Obama Term
The jobless rate when Obama took office in January 2009 was 7.8 percent rate. It exceeded 8 percent for 43 months prior to September, the longest such stretch since monthly records began in 1948.
The most recent polls suggest the race for the presidency is in a dead heat. The Washington Post/ABC News national tracking poll released Oct. 31 showed Romney and Obama tied at 49 percent among likely voters. An aggregation of national polls compiled by the website RealClearPolitics also showed a tied race, with each candidate at 47.4 percent.
Obama leads Romney by six percentage points in Iowa among likely voters and is out front by smaller margins in New Hampshire and Wisconsin, according to a NBC News/Wall Street Journal/Marist College published yesterday.
The poll shows Obama ahead 50 percent to 44 percent in Iowa, 49 percent to 47 percent in New Hampshire, and 49 percent to 46 percent in Wisconsin. The three states have 20 of the 270 Electoral College votes needed to win the White House. A University of Cincinnati poll released yesterday in Ohio, the state where the campaigns are competing the most aggressively, showed Obama backed by 48 percent of likely voters while Romney had the support of 46 percent.
1984 Election
Ronald Reagan is the only president to have been re-elected since World War II with a jobless rate above 6 percent. The rate was 7.2 percent on Election Day 1984, having dropped almost 3 percentage points in the previous 18 months. Through October this year, the rate has dropped 1.1 points in the same period under Obama.
Today’s report showed factories added 13,000 workers in October after a 14,000 decrease a month earlier.
Employment at private service-providers climbed 163,000. Construction companies added 17,000 workers, the most since January and retailers took on 36,400 employees.
One of those newly employed, Micaela Padilla from Columbus, Ohio, has been at work for about a week after searching since July. To help secure her position at the temporary agency where she works in fund-raising for the Leukemia & Lymphoma Society, the 31-year-old took career classes at New Directions, a non- profit career counseling organization in her city.
‘More Involved’
“Looking for a job was challenging because when you really want to find something that fits you, you have to put in the leg work,” said Padilla, who dedicated 15 to 20 hours a week to the search. “It was a lot more involved than I thought it would be. It takes a lot of patience. I feel bad because so many people need a job.”
Government payrolls decreased by 13,000.
Average hourly earnings fell to $23.58 from $23.59 in the prior month, today’s report showed.
The average work week for all employees was unchanged at 34.4 hours.
The so-called underemployment rate -- which includes part- time workers who’d prefer a full-time position and people who want work but have given up looking -- decreased to 14.6 percent from 14.7 percent.
More Optimistic
While torn about who will be president, Americans have grown more optimistic about the U.S. economy, an indication the labor market may be improving for some. Spending by households climbed in September by the most in seven months. The Thomson Reuters/University of Michigan consumer sentiment index rose last month to the highest level since before the recession began five years ago. The Conference Board’s index reached the highest level since February 2008.
The weak global economy and the fiscal cliff have prompted some companies to begun cutting back. Spending on equipment and software was unchanged in the third quarter, the weakest reading in three years, a report from the Commerce Department showed on Oct. 26.
Cummins Inc. (CMI) said Oct. 31 it will reduce its headcount by 1,000 to 1,500 by the end of the year after revenue dropped 14 percent in the third quarter from a year earlier. The maker of heavy-truck engines said shipments fell 26 percent last quarter, and production and new orders have come in weaker than expected.
Global Demand
“We are experiencing significantly weaker demand in many of our largest markets,” Tom Linebarger, chairman and chief executive officer of the Columbus, Indiana-based company, said on a call after the earnings release. “End users are reluctant to proceed with new purchases, apparently due to uncertainty about the U.S. economy and concerns about possible impacts from the fiscal cliff. There is also a high degree of uncertainty about the direction of the global economy, and at this point in time it is not clear when demand will improve.”
Warning that they can’t combat a slowdown in growth caused by stricter fiscal policy, Federal Reserve officials said Sept. 13 the central bank would hold its target interest rate near zero until at least mid-2015 to stimulate more hiring. The Fed also began a third round of stimulus, buying $40 billion in mortgage bonds a month.
To contact the reporter on this story: Alex Kowalski in Washington at akowalski13@bloomberg.net
To contact the editor responsible for this story: Christopher Wellisz at cwellisz@bloomberg.net
