Economy Adds 151,000 Jobs

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The Wall Street Journal
By: Luca Di Leo & Jeffrey Sparshott
November 5, 2010

The U.S. economy added jobs in October for the first time since May as private-sector hiring picked up, but the unemployment rate remained elevated.

Nonfarm payrolls rose by a greater-than-expected 151,000 last month as private-sector employers added 159,000 jobs, the Labor Department said Friday. The September number was revised to show payrolls fell by 41,000, less than an original estimate of a 95,000 decline.

However, the unemployment rate, which is obtained from a separate household survey, remained at a lofty 9.6% in October. About 14.8 million people who would like to work can't get a job. The jobless rate has been above 9.0% since May 2009, right before the recession ended.

Economists surveyed by Dow Jones Newswires had forecast payrolls would rise by only 60,000 and the jobless rate would remain unchanged at 9.6%.

The sluggish pace of the U.S. economy, as highlighted by high unemployment and very low inflation, led the Federal Reserve to announce an aggressive new step this week to try and spur growth. The Fed plans to buy $600 billion in U.S. Treasurys through June in the hope it will keep borrowing rates low and encourage companies to hire and consumers to spend. The central bank has already bought $1.75 trillion in government and mortgage bonds to fight the financial crisis and the recession that followed.

Private-sector payroll gains were revised up for the previous two months. Private employers added 107,000 jobs in September and 143,000 in August, compared to previous estimates showing gains of 64,000 in September and 93,000 in August.

In the October breakdown, most jobs were gained in mining and a number of service-producing industries. Health care continued to add jobs, with employment rising by 24,000 last month. But the manufacturing sector, which had been the big creator of jobs at the start of the recovery, shed 7,000 jobs.

Total government employment, meantime, fell by 8,000, hurt by losses in municipal jobs. Local governments have been grappling with tight budgets.

A broader measure of the unemployment rate, which includes people who stopped looking for work and those settling for part-time jobs, remained high at 17% in October compared to 17.1% in September.

In a sign of the labor market's continued weakness, Friday's report showed that 42% of unemployed Americans, or 6.2 million people, were out of work for more than six months in October. The longer someone is without a job, the harder it is to find work.

In more positive developments, the hourly workweek was up 0.1 hour to 34.3 in October from the previous month. Employers normally increase the hours for their existing work force before hiring new people. Also, more hours means more pay, giving a lift to consumers' spending power.

Average hourly earnings of all employees increased by $0.05 to $22.73, which could also help support consumer spending. Accounting for about 70% of demand in the U.S. economy, household consumption perked up in the third quarter, helping to lift the economy.

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This page contains a single entry by CFED published on November 5, 2010 3:25 PM.

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