Payrolls in U.S. climb as jobless rate drops to six-year low

WASHINGTON – Employers added more than 200,000 workers to payrolls in October for a ninth consecutive month and the jobless rate dropped to the lowest level in six years as the American economy powered past a global slowdown.

The 214,000 increase in employment followed a 256,000 advance the prior month that was more than initially estimated, Labor Department figures showed today in Washington. The jobless rate fell to 5.8 percent, even as more people entered the labor force, boosting the share of the population working to the highest in five years.

Steadfast hiring signals employers are confident domestic demand will hold up in the face of struggling European and emerging economies. The report probably keeps Federal Reserve policy makers on track to boost interest rates in 2015 even as wages, the labor market’s weak spot, continued to lag behind.

“Despite all the talk about the global economy, the U.S. domestic economy seems to be doing fairly well,” said John Silvia, chief economist at Wells Fargo Securities LLC in Charlotte, N.C., who correctly projected the decline in the unemployment rate. “You look at these employment numbers, and although wages are steady, the combination of job gains and steady wages means you’re going to see continued personal income and therefore consumer spending.”

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The increase in October employment was broad-based, with factories, construction companies and retailers among those adding employees. Payrolls at restaurants jumped 41,800 and hourly earnings for all workers rose less than projected.

Stock futures

Stock-index were little changed after the report, with the contract on the Standard & Poor’s 500 Index expiring next month rising less than 0.1 percent to 2,028.4 at 9:02 a.m. in New York.

The last time payrolls increased at least 200,000 for as many months was a stretch that ended in March 1995. The median forecast in a Bloomberg survey of 100 economists called for a 235,000 advance in October payrolls. Forecasts ranged from increases of 140,000 to 314,000. Revisions to prior reports added 31,000 jobs to payrolls in the previous two months.

Economists surveyed by Bloomberg Oct. 3 to Oct. 8 project payroll gains will average about 220,000 per month in 2014. That would mark the fastest pace of employment growth since 1999. Last year, the U.S. added an average 194,250 jobs each month.

The unemployment rate, which is derived from a Labor Department survey of households, fell to the lowest since July 2008. It was projected to hold at 5.9 percent, according to the survey median.

Employment-population

The share of the population with jobs rose to 59.2 percent in October, the highest since July 2009, from 59 percent the prior month.

Average hourly earnings for all workers rose 0.1 percent in October from the prior month. They were up 2 percent over the past 12 months, less than the 2.1 percent median forecast. The average work week for all employees increased six minutes to 34.6 hours.

Limited wage gains partly explain Americans’ dim perceptions of the economy, which helped Republicans capture control of the Senate from Democrats and solidify their majority in the U.S. House during the midterm elections this week. The results ensured that the GOP will control both chambers of Congress for the remainder of President Barack Obama’s term.

Private payrolls, which don’t include government agencies, increased 209,000 in October after a 244,000 advance. Factories added 15,000 workers after a 9,000 gain in September, today’s report showed. Construction companies took on 12,000 workers.

Service producers

Employment at private service providers rose 181,000 in October, including a 52,000 gain in the leisure and hospitality industry that reflected more hiring at eating establishments.

The underemployment rate – which includes part-time workers who’d prefer a full-time position and people who want to work but have given up looking – declined to 11.5 percent, the lowest since September 2008, from 11.8 percent.

Fed officials cited further labor market progress last week, when they ended monthly asset purchases that have bloated the central bank’s balance sheet to more than $4 trillion in a bid to stimulate growth. The policy making Federal Open Market Committee referenced “solid job gains and a lower unemployment rate.”

They also said an “underutilization of labor resources” that is “gradually diminishing” in the sixth year of the expansion may keep the officials on hold for an increase in their benchmark interest rate, which remains near zero.

Global economy

Unlike in the U.S., central bankers in Europe and Japan are battling to shore up their economies. Mario Draghi yesterday sought to restore the faith of investors in the European Central Bank’s ability to revive its ailing economy. He said the ECB will buy assets for at least two years and study further stimulus. His comments came days after the Bank of Japan extended its own stimulus campaign.

Gains in employment in the U.S., and more recently a drop in prices at the gas pump, are helping to bolster consumer sentiment and underpin the household purchases that make up about 70 percent of the economy. Ford Motor Co., Toyota Motor Corp., Fiat Chrysler Automobiles NV and Nissan Motor Co. reported October sales that exceeded analysts’ estimates as buyers emboldened by falling gasoline prices flocked to sport- utility vehicles.

“The U.S. economy has steadily improved all year,” Kurt McNeil, U.S. sales chief at General Motors Co., said in a Nov. 3 statement. “Now we are poised for a stronger expansion backed by an improved job market, higher consumer confidence and lower fuel prices.”

Gasoline prices

The average cost of a gallon of regular gasoline was $2.96 yesterday, the cheapest since December 2010, according to motoring group AAA.

“I think oil is going to have a positive impact on the consumer side of our business,” M. Jack Sanders, chief executive officer at Hartsville, S.C.-based Sonoco Products Co., said on an Oct. 16 earnings call.

The corporate optimism extends to America’s housing industry and companies such Weyerhaeuser Co. after residential real estate has been slow to pick up this year.

“We are confident that housing markets will continue to strengthen, supported by employment growth and increasing consumer confidence,” Doyle Simons, chief executive officer of the forest products company, said on an Oct. 31 earnings call.

The economy grew at a 3.5 percent annualized rate from July through September after a 4.6 percent rate in the second quarter, Commerce Department data show. It marked the strongest back-to-back readings since the last six months of 2003.

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1 COMMENT

  1. As of 10/24/2014, Rhode Island’s Unemployment Rate at
    Level U6 is: FOURTEEN POINT FOUR PER CENT (14.4%)
    (further details at http://www.bls.gov/lau/stalt.htm updated quarterly…)
    and as of 11/7/2014, the National Unemployment Rate
    at Level U6 is: ELEVEN POINT FIVE PERCENT (11.5%)
    (further details at http://www.bls.gov/news.release/empsit.t15.htm
    updated monthly…..jkp