The American job market is looking a little stronger than had been feared just a few months ago, according to the government’s final labor snapshot before the presidential election.
Whoever wins the election on Tuesday might even inherit an accelerating economy in 2013, if (and that is a big if) Congress is able to smooth over that pesky fiscal cliff in the few weeks after the election.
The nation’s employers added 171,000 positions on net in October, the Labor Department reported on Friday, and more jobs than initially estimated in August and September. Hiring was broad-based, with just nearly every industry except state government adding jobs. The unemployment rate ticked up slightly to 7.9 percent in October, from 7.8 percent in September, but for a good reason: more workers joined the labor force and so officially counted as unemployed.
None of this makes for a game-changer in the presidential race, analysts said. But it appeared to provide some relief for President Obama, whose campaign could have been sideswiped by bad news from the volatile monthly jobs report. With the latest numbers, the economy finally shows a net gain of jobs during his presidency. His record had previously been weighed down by huge layoffs in his first year in office after the financial crisis.
The report also allayed widespread suspicion that September’s plunge in the unemployment rate — to below 8 percent for the first time since the month he took office — might have been a one-month statistical fluke.
“Generally, the report shows that things are better than we’d expected and certainly better than we’d thought a few months ago,” said Paul Dales, senior United States economist for Capital Economics. “But we’re still not making enough progress to bring that unemployment rate down significantly and rapidly.”
Mitt Romney, the Republican presidential nominee, said in a statement that the jobs report was evidence of the need to change the nation’s economic policies.
“Today’s increase in the unemployment rate is a sad reminder that the economy is at a virtual standstill,” he said. He also noted that October’s unemployment rate of 7.9 percent was higher than the 7.8 percent when Mr. Obama took office in January 2009. Unemployment peaked at 10 percent in October of Mr. Obama’s first year in office, and has been skidding downward very, very slowly since then.
Economists were hopeful that once the election was over and Congress addressed the major fiscal tightening scheduled for the end of this year, job and output growth could speed up further.
“If we can do this kind of job growth with all the uncertainty out there, imagine if we were to clear up those tax issues and hold back the majority of tax increases that are pending at the end of the year,” said John Ryding, chief economist at RDQ Economics. “We could do much better in 2013, maybe as well as we appeared to be doing earlier this year.”
The jobs snapshot for October was based on surveys conducted too early in the month to capture work disruptions across the East Coast caused by Hurricane Sandy. Economists expect that businesses and employment will resume their normal activity by the next jobs survey, in mid-November, and that some industries will even show an increase in hiring because of the storm.
“We had a lot of lost hours worked and production stuff still delayed, but much of that will be offset by hiring of emergency workers, government workers and construction, to do all that emergency fixing,” said Diane Swonk, chief economist at Mesirow Financial.
In October, the biggest job gains were in professional and business services, health care and retail trade, the Labor Department said. Government payrolls dipped slightly. State and local governments have been shedding jobs in most months over the last three years.
One of the low points of the report was in hourly wages, which remained flat in October after showing barely any growth in the previous several months.
“Perhaps the decline in real wages is a factor here in being able to employ more people,” Mr. Ryding said. “It’s something to keep in mind when we think about creating jobs and whether we’re maybe creating the wrong sort of jobs.”
A report from the National Employment Law Project, a liberal research and advocacy organization that focuses on labor issues, found that while the majority of jobs lost in the downturn were middle-income jobs, the majority of the jobs created since then had been lower-wage ones.
Stock markets opened higher after the jobs report on Friday, but fell for the day, apparently weighed down later by a number of concerns from the possible lingering effects of the storm to the uncertainty about the outcome of the election.
The United States has now posted job gains for 25 consecutive months, but the increases have been barely large enough to absorb the increase in the working population. About 12 million unemployed people remain waiting for work, with about two out of five of those people out of a job for more than six months.
That is in addition to more than eight million people who are working part time but really want full-time jobs.
“I’m not just competing against all the other people who are out of work,” said Griff Coxey, 57, of Cascade, Wis., who was laid off in May from his controller job at a small business. “I’m also competing against all those people who are actually working but are underemployed.”
Like two million other idle workers, Mr. Coxey is scheduled to lose his unemployment benefits the last week of the year, when the federal extensions expire. He said he still had some savings to fall back on, but many workers do not.
Labor advocates and many economists have been urging Congress to renew the benefits as part of their discussions of the “fiscal cliff” during their postelection session. So far, though, the issue has received little attention, and analysts worry that ending extended benefits could disrupt whatever forward momentum the economy has.
“Federal unemployment benefits are one of the most effective stimuli we have,” said Christine L. Owens, the executive director of the National Employment Law Project.
“The recovery is still fragile,” she said, “and to pull that amount of income and expenditure out of the economy — particularly at a time when people thinking about the holiday season — will have a significant impact on not just those individuals and their families, but the economy as a whole.”
Friday’s jobs report was unlikely to affect policy from the Federal Reserve, which has pledged open-ended stimulus until the job market improves “substantially.”
“The Fed desires both a substantial and sustainable improvement in labor market conditions and is likely to read recent payroll growth as a positive step in the right direction, but just one step in a longer journey,” said Michael Gapen, director of United States research and global asset allocation at Barclays Capital.
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