Unemployment rate edges up to 7.9% from 7.8%
By Jeffry Bartash, MarketWatch
WASHINGTON (MarketWatch) — The U.S. created a better-than-expected 171,000 jobs in October and hiring rose faster in the prior two months that previously believed, but the politically sensitive unemployment rate edged up slightly to 7.9%, the government said Friday.
The October employment report, which came out just four days before the presidential election, is unlikely to change the trajectory of the race. Republicans will point to the rise in unemployment while Democrats can cite stronger job gains in the past four months.
Yet the improvement in hiring is a welcome sign to Wall Street that the U.S. economy is still continuing to expand at a moderate pace of around 2% or so. Stock futures SPZ2 +0.48% advanced on the news.
The increase in net hiring last month exceeded market expectations. Economists surveyed by MarketWatch had forecast a net increase of 120,000 jobs in October, based on the Labor Department’s survey of roughly 440,000 business establishments. The survey was conducted before Sandy and the storm did not affect the numbers.
The unemployment rate, drawn from a separate survey of about 60,000 households, was expected to edge up to 7.9% from 7.8%. The household survey is viewed as a less reliable indicator of near-term hiring trends than the so-called establishment report, however.
In September, the unemployment rate fell sharply to 7.8% from 8.1%,moving below 8% for the first time since Obama took in office in January 2009.
The surprising drop provoked plenty of controversy coming so close to the election.
Where the jobs are
The biggest increases in hiring last month took place in professional services, health care, retail and leisure and hospitality.
The professional-services sector added 51,000 jobs, health care added 31,000, retail gained 36,000 and leisure and hospital companies hired 28,000 workers.
Also, manufacturers added 13,000 jobs after shedding workers in the prior two months.
Companies also hired more employees in September and August than previously estimated. The number of new jobs created in September was revised up to 148,000 from a prior estimate of 114,000. And August’s figure was revised to 192,000 from 142,000 to mark the best month of hiring since February.
Indeed, the pace of hiring has picked up in the fall after a spring lull. Monthly job growth has averaged 173,000 over the past four months compared to a 67,000 average in the April-to-June period.
Still, the economy would have to add at least 250,000 jobs a month for several years to reduce the unemployment rate to the pre-recession level of around 6%, analysts calculate. The U.S. hasn’t come close to that rate of hiring since the recession ended in mid-2009.
The lackluster pace of hiring explains why the unemployment rate has remained so high for so long. Some 23 million Americans who want to work still cannot find full-time jobs, based on the latest government data. The U.S. still has almost 4 million fewer jobs now than it did before the recession.
Job-hunting may not get much easier until early next year. Many businesses are reluctant to make major decisions on hiring and investment in the waning months of 2012 until they see who is elected president and learn whether Washington will act to stave off a potential budget crisis in January.
That’s when large spending cuts and higher federal taxes — the so-called fiscal cliff — will kick in unless lawmakers in both parties end a stalemate and reach a deal.
When discouraged jobseekers and those forced to work part-time jobs are included, the unemployment rate was 14.6% in October. The so-called U6 rate has fallen gradually over the past year.
Meanwhile, average hourly wages fell 1 cent to $23.58 in October. For the past 12 months wages have risen 1.6%.
The average workweek was unchanged for the fourth month in a row at 34.4 hours. The workweek usually rises when the economy gets stronger.
Jeffry Bartash is a reporter for MarketWatch in Washington.
