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Good News For US. Economy: Payrolls surge by 337,000 in Oct.
NY TIMES LINK
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Labor Market Snaps Out of Lull to Add 337,000 New Jobs
By EDUARDO PORTER
he labor market snapped out from its summer lull to add 337,000 new jobs in October, the biggest increase since March, the Labor Department reported today, raising hopes that businesses are overcoming years of intense caution and beginning to move aggressively to hire workers.
Economists cautioned, however, that a one-month gain did not constitute a trend, since the economy has recorded encouraging spurts of job growth before that have just fizzled out in subsequent months.
"This is the kind of job report you want to see at this stage of an economic recovery," said Jared Bernstein, an economist at the liberal-leaning Economic Policy Institute in Washington. "But we've been here before. Whether this will be a persistent trend is hard to know."
The employment report surprised Wall Street economists, who had been expecting an increase about half as large. It also portrayed a much more vigorous labor market than that previously indicated over the past three months, as the Labor Department increased its earlier estimates of job growth in August and September by 113,000.
On average, it said, the economy has been adding 225,000 jobs every month since August, substantially above the 150,000 needed to absorb new entrants into the labor force because of simple population growth.
The unemployment rate inched up to 5,5 percent from 5.4 percent. But that increase was in large part a result of better employment prospects, which drew many previously discouraged unemployed workers back into the job market, reversing the labor force contraction of the prior two months.
Economists, who had been baffled that the nation's relatively strong economic growth was not followed by better job numbers, were quite pleased. "We have been waiting for this for the better part of the last two or three quarters," said Robert Gay, a former economist at the Federal reserve who is global strategist at Commerzbank Securities.
Manufacturers shed 5,000 jobs in October. But employment growth was broadly based across the service sector, with strong gains in the health and education sectors. The number of hours worked at private businesses remained unchanged, at 33.8 hours a week, but hourly wages increased 0.3 percent, to $15.83.
Some one-time factors and seasonal effects improved the employment situation. The cleanup and reconstruction of the hurricane-ravaged Southeast contributed to the 71,000 new jobs in construction. The back-to school season increased teacher employment. But even stripping out these one-time events, Mr. Gay estimated the underlying job growth was around 200,000. "That is not a number to be pooh-poohed," he said.
Financial markets were jolted by the data, with stock prices moving higher. Bond prices declined as the emerging employment picture bolstered the view that the Federal Reserve would remain the path of gradual monetary tightening, instead of any quick, sharp increases. The Fed is expected to raise short-term interest rates by a quarter point next Wednesday and again in December.
With the presidential election over, the new job numbers were of little political consequence. Still, both parties grabbed them anyway. Democrats pointed out that there are still 371,000 fewer payroll jobs outside of the farming sector than there were when President Bush took office nearly four years ago. But Treasury Secretary John W. Snow portrayed them as validation of the administration's tax-cutting strategy. "Roughly 2.4 million jobs have been created since August of 2003, with 2 million so far in 2004," he said in a statement.
The question now is whether this pace of job growth is sustainable or whether businesses will revert to the reluctance to spend money that has characterized their behavior since the economy sank into recession in March 2001.
The slowdown in productivity growth, to 1.9 percent in the third quarter, is consistent with the view that businesses are feeling ready to hire again.
Following a long period of high profits, low investment and meager payroll growth, most businesses are flush with cash. Jack Ablin, chief investment officer at Harris Private Bank, noted that with the election out of the way, businesses might be more willing to spend it. "Some of that cash could migrate its way into the labor market and pick up some employment."
Yet the economy had a similar burst of job creation in the spring, which economists greeted as evidence that following a sustained patch of economic growth businesses had finally decided it was time to start hiring. But then a surge in energy prices restrained consumer spending. By June, job growth had been reduced to a trickle.
And there are some murky patches in the October job picture: both part time work and work for temporary employment services jumped -indicating that many businesses might not yet be truly committed to having a bigger work force. And more than a fifth of the unemployed have been out of work for more than half a year, the highest percentage since March.
With high energy prices, declining consumer confidence and a slowdown in car sales last month weighing on the economy, some economists believe that businesses' appetite for new workers might decline somewhat again. "I don't expect this pace to continue," said Mickey Levy, chief economist at Banc of America Securities. "But it does cast a very positive tone."
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.1 increase in unemployment because that increase was due in large part a result of better employment prospects.
I really don't know how this good news can be spinned into bad news..by you libs. I say kick back and enjoy the good news. I'm sure some of you will whine.
Here's a couple of interesting comments from the New York Times article on the job announcements:
"On average, it said, the economy has been adding 225,000 jobs every month since August, substantially above the 150,000 needed to absorb new entrants into the labor force because of simple population growth."
"Democrats pointed out that there are still 371,000 fewer payroll jobs outside of the farming sector than there were when President Bush took office nearly four years ago."
Somebody check my math, please, but that would seem to suggest the President is, in fact, not at all likely to finish his first term with a net job loss since we are on track to add another 600,000 or so jobs before the end of his first term on January 20, 2005.
TYPICAL LIB SPINS I ANTICIPATE:
1.It says that most of that job creation is related to hurricane reconstruction efforts.
FACT: Spin a little harder please. Boosted by cleanup and reconstruction efforts in hurricane-affected areas of the Southeast, employment in construction increased by 71,000 in October
2.They were all burger flipping jobs??
Umm incorrect again:
Breakdown of employment jobs added here:
http://stats.bls.gov/news.release/empsit.nr0.htm
Last edited by speedracer_mec on Nov-06-2004 at 22:18
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i am curious as to the breakdown listed, then i may be able to post a response... or hide under a rock
