Solid job growth in last reading before election

CHRISTOPHER S. RUGABER

AP Eco­nom­ics Writer

WASHINGTON — The United States added a solid 171,000 jobs in Octo­ber, and more than a half-million Amer­i­cans joined the work force, the lat­est signs that the uneven eco­nomic recov­ery is gain­ing strength once again.

In addi­tion, more jobs were added in August and Sep­tem­ber than believed. But the unem­ploy­ment rate inched up to 7.9 per­cent because not all those join­ing the work force found work, the gov­ern­ment said Friday.

The report was the final snap­shot of the econ­omy before the pres­i­den­tial election.

“The econ­omy is in a lot bet­ter shape than most peo­ple believe,” said Joel Naroff, pres­i­dent of Naroff Eco­nomic Advi­sors. “That sets us up for stronger growth next year no mat­ter who is elected on Tuesday.”

A gov­ern­ment sur­vey of house­holds found that 578,000 Amer­i­cans joined the work force in Octo­ber, the Labor Depart­ment said. Of those, 470,000 found work. The dif­fer­ence is why the unem­ploy­ment rate rose from 7.8 per­cent in September.

Home prices are finally ris­ing, and retail­ers and car com­pa­nies this week reported stronger sales. Con­sumer con­fi­dence in Octo­ber reached its high­est point in almost five years, and stocks are within reach of record highs.

Big busi­nesses are still cau­tious, partly because of slow­ing global demand for their goods. But the report found that they con­tin­ued to add jobs in greater num­bers than they did last spring.

A sec­ond gov­ern­ment sur­vey, of large com­pa­nies and gov­ern­ment agen­cies, yielded the 171,000 num­ber. Com­pa­nies added 184,000 jobs, the most since Feb­ru­ary, and fed­eral, state and local gov­ern­ments cut 13,000.

The report was com­piled before Super­storm Sandy struck the East Coast ear­lier this week and dev­as­tated many busi­nesses. Some econ­o­mists think the rebuild­ing in the North­east will add to con­struc­tion jobs in the months ahead.

The gov­ern­ment also revised its data to show that 84,000 more jobs were added in August and Sep­tem­ber than pre­vi­ously esti­mated. August’s job gain was revised to 192,000 from 142,000, and September’s to 148,000 from 114,000.

For the third time since the recov­ery from the Great Reces­sion began in June 2009, the econ­omy appears to be pick­ing up momentum.

Since July, the econ­omy has cre­ated an aver­age of 173,000 jobs a month. That is up from an aver­age of 67,000 a month from April through June.

The pickup in hir­ing sug­gests that busi­nesses aren’t as wor­ried as many ana­lysts thought about the pack­age of tax increases and spend­ing cuts known as the “fis­cal cliff” that will take effect unless Con­gress acts by Jan. 1.

Com­pa­nies have cut back spend­ing on com­put­ers, indus­trial machin­ery and other heavy equip­ment in recent months. That was seen by many econ­o­mists as a sign of con­cern about the cliff and Europe’s eco­nomic deterioration.

But bet­ter con­sumer demand may be encour­ag­ing employ­ers to hire more employ­ees any­way. James Marple, an econ­o­mist at TD Bank, said hir­ing could take off next year if the fis­cal cliff is avoided.

“The fact that busi­nesses are con­tin­u­ing to expand even with huge fis­cal uncer­tainty means that once this cloud lifts, the pace of job cre­ation has lots of room to accel­er­ate,” he said.

One big ques­tion is whether con­sumers will be able to keep spend­ing enough to pro­pel growth. Aver­age hourly wages rose only 1.1 per­cent in the past 12 months, the slow­est annual pace on records dat­ing back to 1965.

But the econ­omy has added 1.6 mil­lion jobs in 10 months this year. All those new pay­checks mean more demand for goods and ser­vices, which should lead to more hir­ing. The coun­try could enter what econ­o­mists call a vir­tu­ous cycle, an esca­lat­ing loop of hir­ing, more spend­ing and still more hiring.

Polit­i­cally, the report was more neu­tral. It allowed both Pres­i­dent Barack Obama and his Repub­li­can oppo­nent, Mitt Rom­ney, polit­i­cal ammu­ni­tion in the fad­ing days of the campaign.

It allowed Obama to argue that the econ­omy has added jobs for 25 con­sec­u­tive months, since Sep­tem­ber 2010, and that the pri­vate sec­tor has added jobs for 32 con­sec­u­tive months, since Feb­ru­ary 2010.

Cam­paign­ing in Hilliard, Ohio, the pres­i­dent said: “We’ve made real progress, but we are here today because we know we’ve got more work to do. Our fight goes on.”

The report allowed the Rom­ney cam­paign, how­ever, to argue that the unem­ploy­ment rate will be higher on Elec­tion Day than it was on Inau­gu­ra­tion Day in Jan­u­ary 2009, when it was 7.8 percent.

“I won’t waste any time com­plain­ing about my pre­de­ces­sor,” Rom­ney said at a rally in West Allis, Wis. “From Day One, I will go to work to help Amer­i­cans get back to work.”

Obama will face vot­ers with the high­est unem­ploy­ment rate of any incum­bent since Franklin Roo­sevelt. It was 7.8 when Ger­ald Ford lost to Jimmy Carter in 1976, and 7.2 per­cent when Ronald Rea­gan trounced Wal­ter Mon­dale in 1984.

The story of what hap­pened to the econ­omy dur­ing Obama’s term is, of course, more complicated.

The month Obama took office, the econ­omy lost 818,000 jobs, the worst fig­ure of the Great Reces­sion. Dur­ing the next 13 months he was in office, the econ­omy lost 4.3 mil­lion jobs.

Jobs reports were mixed, with some gains and some losses, for the next seven months. Since the begin­ning of Octo­ber 2010, the econ­omy has added 3.9 mil­lion jobs. The total for Obama’s time in office is growth of 194,000 jobs.

In addi­tion, the Labor Depart­ment said in Sep­tem­ber that 368,000 jobs were cre­ated in the year end­ing in March but have not been assigned to the month-by-month sta­tis­tics. Adding those jobs, Obama’s total is 562,000.

The econ­omy lost 13,000 jobs dur­ing George W. Bush’s first term and added 1.1 mil­lion jobs dur­ing his sec­ond term. The econ­omy added 11.5 mil­lion jobs dur­ing Bill Clinton’s first term and 11.2 mil­lion dur­ing his second.

As Obama and Rom­ney face vot­ers, the econ­omy “is show­ing incred­i­ble resilience in the face of sig­nif­i­cant chal­lenges,” said Marple, the TD Bank economist.

Tom Por­celli, an econ­o­mist at RBC Cap­i­tal Mar­kets, was less enthu­si­as­tic. “The econ­omy is not falling off a cliff, but it’s not rag­ing ahead with vigor, either,” he said.

Investors also had a mea­sured response. The yield on the 10-year U.S. Trea­sury note jumped to 1.78 per­cent from 1.72 per­cent, indi­cat­ing investors were mov­ing money out of bonds and into stocks, then dropped to 1.71 percent.

The Dow Jones indus­trial aver­age climbed as much as 56 points but closed down 139 points, at 13,093.

The unem­ploy­ment rate has fallen a full per­cent­age point in the past year. But some of that was because peo­ple gave up look­ing for work, and there­fore were no longer counted as unemployed.

That pushed the per­cent­age of Amer­i­cans work­ing or look­ing for work to 63.5 per­cent in August, a 31-year low.

But since then, more Amer­i­cans have started or resumed their job hunts, and most have found work. The per­cent­age of Amer­i­cans work­ing or look­ing for work rose for a sec­ond straight month in Octo­ber to 63.8 percent.

The num­ber of peo­ple with part-time jobs who wanted full-time work dropped last month. And the num­ber of peo­ple who have stopped look­ing for work also declined. The so-called under­em­ploy­ment rate, which con­sists of those two groups plus the unem­ployed, dipped to 14.6 per­cent from 14.7 percent.

The government’s break­down of Octo­ber job growth showed that the hous­ing mar­ket is finally gen­er­at­ing jobs. Con­struc­tion com­pa­nies added 17,000, the most since Jan­u­ary. Man­u­fac­tur­ers added 13,000 after shed­ding 27,000 the pre­vi­ous two months.

Pro­fes­sional ser­vices such as archi­tects and com­puter sys­tems providers also added jobs. So did retail­ers, hotels and restau­rants, and health care.

Vocus Inc., a Beltsville, Md., com­pany that makes mar­ket­ing soft­ware, has ramped up hir­ing this year to keep up with rapid growth in demand. It has nearly dou­bled its staff to about 750 and plans to add at least 200 next year.

The com­pany is ben­e­fit­ing as more busi­nesses switch from news­pa­per ads and the Yel­low Pages to social media and online search engines. Vocus expects rev­enue to jump more than 50 per­cent this year com­pared with 2011.

Com­pa­nies “are still will­ing to make invest­ments in mar­ket­ing soft­ware,” Rick Rud­man, the chief exec­u­tive, said. “We’re help­ing peo­ple grow their businesses.”

Posted by AP News on Nov 2 2012. You can follow any responses to this entry through the RSS Feed. Comments can be made below.