U.S. jobless rate rises to 7.9%, but hiring is up

by The City Wire staff (info@thecitywire.com) 3 views 

American employers added more workers than forecast in October and a rush of people entering the labor force pushed the jobless rate higher, according to the last report on the labor market before next week’s presidential election.

Broad-based gains in employment – from car dealers and hospitals to factories and construction sites – indicate consumers are likely to spend more freely and shore up the three-year expansion in the face of a global economic slowdown and political gridlock in Washington over taxes and spending.

Hiring increased by 171,000 workers after a 148,000 gain in September that was bigger than first estimated, Labor Department figures showed today (Nov. 2) in Washington. October’s increase exceeded the most optimistic forecast in a Bloomberg survey with a median projection of a 125,000 gain. Unemployment rose to 7.9%.

“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.”

Private payrolls, which exclude government agencies, climbed by 184,000 last month, the most since February. They were forecast to advance by 123,000.

Revisions added a total of 84,000 jobs to the employment count in the previous two months and brought average gains since June to 173,000.

Government payrolls decreased by 13,000. Retailers took on 36,400 employees, the most since April 2011. Temporary hiring rose by 13,600.

Payrolls forecasts ranged from gains of 30,000 to 154,000 following an initially reported 114,000 increase in September.

The unemployment rate, which rose from 7.8% in September, matched the Bloomberg survey median. Estimates ranged from 7.7% to 8 %. The figures were unaffected by Hurricane Sandy because surveys of businesses and households were conducted before the storm struck.

Alan Krueger, chairman of President Barack Obama’s Council of Economic Advisers, said in a statement that the jobs figures provide “further evidence that the U.S. economy is continuing to heal from the wounds inflicted by the worst downturn since the Great Depression.”

Republican challenger Mitt Romney emphasized that the unemployment rate in October was higher than the 7.8% when Obama took office in January 2009, saying in a statement that the report “is a sad reminder that the economy is at a virtual standstill.”

The jobless rate exceeded 8% for 43 months prior to September, the longest such stretch since monthly records began in 1948.

Construction companies added 17,000 workers last month, the most since January. Factories added 13,000 workers after a 14,000 decrease a month earlier.

General Motors Co. is among manufacturers hiring as the U.S. auto industry makes a comeback after government bailouts during the depths of the financial crisis.

Detroit-based GM, the largest U.S. automaker, has said it will hire about 10,000 workers as part of its plan to bring more work in-house. The new so-called Innovation Center in Warren, Michigan, is one of four facilities planned in the U.S.

Ronald Reagan is the only president to have been re-elected since World War II with a jobless rate above 6%. The rate was 7.2% 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.

While employment improved last month, compensation lagged behind. Average hourly earnings climbed 1.6% in October from the same time last year, the smallest gain since comparable year-over-year records began in 2007, today’s report showed. Earnings for production workers rose 1.1% in the 12 months to October, the weakest since records began in 1965.

The gain in payrolls so far this year has averaged 157,000 a month, little changed from the 153,000 average for 2011. Monthly employment gains in 2010 averaged 86,000.
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 % from 14.7 %.

An improving job market has boosted consumer confidence, helping to drive the biggest increase in household spending in seven months in September. Consumer purchases account for 70% of the economy.

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.