Economy Wobbles to 80,000 New Jobs, Rate Slips to 9%
The U.S. jobs market remained stuck in neutral during October, with the economy creating just 80,000 new jobs as the stubbornly high unemployment rate nudged lower.
Amid few expectations that the employment picture has improved, government numbers Friday confirmed the obvious: The unemployment rate narrowly lower at 9.0 percent where it likely will be for many months to come.
Still, that was one-tenth of a percent lower than September's rate. The number has vacillated as the labor participation rate has varied.
The total job creation was a bit lower than the 100,000 that economists had expected.
Among the more remarkable points to come out of the report was a big upward revision from September, which originally was reported as a gain of 103,000. The revised numbers showed job growth at 158,000 for the month. The August numbers, a report that initially came in as flat and triggered a massive stock market selloff, were amped up again to 104,000 after a revision last month to 57,000.
"Looking at the trend is more important than looking at any one report. The overall report was a little better than expected even though the headline number was a little worse than expected," said Brad Sorensen, director of market and sector analysis at the Schwab Center for Financial Research. "For right now, a continued sort of steady-as-she-goes improvement — that's the course were on for the next several months at least."
The report comes just days after the Federal Reserve delivered a own body blow to job expectations, saying the unemployment rate will go no lower than 8.5 percent to 8.7 percent by the end of 2012 and will remain in the 6.8 percent to 7.7 percent through 2014.
The central bank considers full employment when the jobless rate falls to 5.2 percent to 6 percent, where it has not been since July 2008.
"There is not enough demand to support more than the modest job growth seen in September and October. And therefore, look for more of the same late this year and into the winter," Kathy Bostjancic, director of macroeconomic analysis at The Conference Board, said in reaction to the jobs report. "While it may be enough to barely escape recession, the gain in jobs and incomes is not enough to offset consumer pessimism."
Stocks briefly reacted positively to the report, with futures moving from a slightly negative open to slightly positive. Those losses were quickly erased, however, as enthusiasm was muted and the debt crisis continues in Greece.
The birth-death model, used to approximate the amount of businesses created and lost during the month, provided the impetus for the positive jobs number by adding 102,000 for October.
Internals in the report indicated some positives for the jobs market.
The household survey, which is a more precise count of those actually working, rose 277,000 to 140,302,000. The severely high unemployment rate for teenagers slipped to 24.1 percent — the lowest since February — while the jobless rate for blacks was at 15.1 percent, the best since December 2010. The rate for Hispanics rose, however, to 11.4 percent.
Private payrolls actually increased by 104,000, while average hourly earnings rose 5 cents to $23.19.
The so-called real unemployment rate, which counts discouraged and underemployed workers, dropped to 16.2 percent from 16.5 percent. That's the same rate as in August.
They were tepid gains, though, for a jobs market that remains a far cry from indicating growth.
"It's not a game-changer but when you take into account the upward revision to prior months and the drop in the unemployment rate, it's a step in the right direction," John Canally, economic strategist at LPL Financial in New York, told Reuters. "It's about in line with the growth you're seeing in the economy but it's not enough to break us out of the range we're in."
Business and professional services showed the most gains by adding 32,000 for the month. Manufacturing jobs ticked higher by 5,000, while health care added 12,000 and leisure and hospitality rose 22,000.
Employment has been a problem throughout the lagging global economy.
On Friday, Canada reported a job loss of 54,000 in October, much larger than the consensus expectations of 15,000.