US employers stepped up hiring in October and the jobless rate ticked higher as more workers restarted job hunts, a hopeful sign for a lacklustre economy that has been a drag on President Barack Obama’s re-election chances.
Employers added 171,000 people to their payrolls last month, the Labour Department said yesterday. The Government also said 84,000 more jobs were created in August and September than initially estimated.
The jobless rate edged a 10th of a point higher to 7.9 per cent but that was due to a surge of workers back into the workforce. Only people who have recently looked for a job count as unemployed.
The employment data was the last major report card on the economy before Tuesday’s presidential election, which pits Obama against Republican Mitt Romney.
While the rise in the jobless rate was expected, the increase in payrolls beat even the most optimistic forecast in a Reuters poll. US stock index futures jumped following the data while prices for US Government debt fell.
The report provides fodder for both candidates.
Even sustained monthly gains of 171,000 would likely bring down the jobless rate only slowly. A full recovery from the 2007-2009 recession remains distant. The jobless rate, which peaked during the recession at 10 per cent, remains about three percentage points above its pre-recession level.
The persistently high unemployment rate makes it unlikely the Federal Reserve will lose its resolve to keep easy money policies in place until the economy shows more vigour.
The unemployment rate rose largely because 578,000 people entered the workforce. The increase in the jobless rate only partially reverses September’s big drop in the unemployment rate.
All of the gain in payrolls was in the private sector, which added 184,000 jobs in October, the biggest increase since February.
Private service providing jobs were up 163,000, with retail trade adding 36,400 jobs. The construction sector saw a 17,000 increase in jobs.
Still, even with the current pace of job creation, the US economy faces a real threat of a renewed recession next year. (Reuters)