Some 171,000 new jobs were created in the US in October, a key report has revealed.
The report from the Bureau of Labour Statistics also said 84,000 more jobs were created in August and September than
initially estimated – a hopeful sign that the country’s economic recovery is becoming more robust.
“This is a good report no matter how you look at it. The economy is steadily recovering“
– James Braxton Peterson,
Despite the extra jobs, the unemployment rate – a key focus in the neck-and-neck race for the White House – has ticked up by a tenth of a percentage point to 7.9 per cent, a shift which is being seen as a correction to an underestimation of September’s unexpectedly sharp 0.3 percentage point fall.
The boost in new hiring will give some comfort to President Barack Obama’s re-election campaign, as he and Republican opponent Mitt Romney race across the US in the final days before Tuesday’s election.
James Braxton Peterson, a political analyst and director of Africana Studies at Lehigh University, told Al Jazeera: “This is a good report no matter how you look at it. The economy is steadily recovering.”
“The slight uptick from 7.8 to 7.9 actually reflects job seekers’ confidence in the market,” he said.
“When we consider the longer arc of the US stock market, in conjunction with the consistent creation of jobs from month to month, we have to conclude that the economy slowly, but steadily, continues to improve.”
Despite early consensus from economic analysts that the better-than-expected data showed positive growth for the US economy, Romney issued a harsh assessment of the jobs report.
“Today’s increase in the unemployment rate is a sad reminder that the economy is at a virtual standstill,” Romney said, adding that the jobless rate is higher than it was when Obama took office in early 2009.
“For four years, President Obama’s policies have crushed America’s middle class. For four years, President Obama has told us that things are getting better and that we’re making progress,” he said.
“For too many American families, those words ring hollow. We can do better,” Romney argued. “When I’m president, I’m going to make real changes that lead to a real recovery, so that the next four years are better than the last.”
While the rise in the jobless rate was expected, the increase in payrolls beat even the most optimistic forecast in a
The monthly report is one of the most closely watched indicators of the US economy’s health and regularly sets the tone for financial markets worldwide.
Trading in global markets had been sluggish on Friday morning in anticipation of the announcement, but the dollar rose swiftly against both the euro and the yen following the release of the figures.
This is the eighth straight month of job growth, although growth in many of those months was somewhat lacklustre – a trend that will likely reinforce the Federal Reserve’s resolve to keep easy money policies in place until the economy shows more vigour.
“The weakness in overall economic growth momentum has extended into the last quarter of the year,” said Millan Mulraine, an economist at TD Securities in New York.
Romney has made the sluggishness of growth in the jobs market the centrepiece of his campaign.
The latest Reuters/Ipsos daily tracking poll showed Obama and Romney in a dead heat, and the report is likely to provide fuel for both candidates.
Some economists have noted an increase in the jobless rate might have a silver lining if it is driven by Americans pouring into the labour market to restart job hunts.
Even sustained monthly gains of 171,000 would likely bring down the jobless rate only slowly. With the relative
strength seen in the report, a full recovery from the 2007-09 recession remains distant.
The unemployment rate, which peaked during the recession at 10 per cent, remains about three percentage points above its pre-recession level.
Despite the noise made by both candidates’ campaigns around the report, the impact on voters will likely be muted, as most perceptions on the economy appear by now to be firmly fixed.
Ryan Grim, the Washington bureau chief for The Huffington Post, told Al Jazeera that the jobs report would make little difference at this late stage in the election.
“There are very few undecided voters left. I’d actually like to meet the person who’s waiting on this jobs report to make up his or her mind,” he said.
Last month’s jobs report evoked much criticism from Romney supporters, including a comment by former General Electric chief executive Jack Welch that the numbers were “unbelievable” and Obama’s “Chicago guys will do anything.”
Grim said the charge by Welch was “completely nuts”.
Even with a moderate pace of job creation, the US economy faces a real threat of a renewed recession next year.
Without action by politicians, existing legislation will raise taxes and cut spending to the tune of about $600bn in 2013. That scenario – known in Washington as the “fiscal cliff” – could easily cause the economy to contract.
Fears of this possibility may have led businesses to hold back on hiring more workers during the past month.
“The uncertainty around the fiscal cliff has caused companies to just pause,” said John Canally, an economist at LPL Financial in Boston.
Europe’s debt crisis, which has had an impact on factory floors around the world, including those in the US, is also weighing on the US economic recovery.
US manufacturers are thought to have cut 4,000 jobs in October, which would be the third straight monthly decline.
With the overall pace of job growth still subdued, average hourly earnings are expected to rise a tepid 0.2 per cent. The average work week is seen holding steady at 34.5 hours.
October’s projected payroll additions, if sustained, might be just enough to slowly bring down the unemployment rate.
However, the Federal Reserve is expected to expand a new bond-buying programme at the end of the year to compensate for the end of another stimulus programme aimed at driving down borrowing costs.
Persistently weak labour market conditions led the central bank in September to launch a programme to buy $40bn worth of mortgage-backed securities every month until there is a sustained pickup in the labour market.
“The Fed is probably not impressed with the improvement in the job market over the past couple of months,” said Ryan Sweet, an economist at Moody’s Analytics in West Chester, Pennsylvania.
– Additional reporting by Ayse Alibeyoglu in Washington