Jump in hiring lifts spirits on economy
U.S. employment jumped by much more than expected last month as private companies hired workers at the fastest pace since April, a sign the sluggish economy is finally starting to tick up.
Nonfarm payrolls rose a solid 151,000 in October, the first gain since May, a government report showed on Friday. Private hiring rose by 159,000, while the government cut 8,000 jobs.
Data for August and September also was revised to show 110,000 fewer jobs were lost than previously thought.
Economists had expected payrolls to increase a tepid 60,000 last month, with private employment rising 75,000.
"This was hugely surprising. It's strong across the board," said Fabian Eliasson, vice president of currency sales at Mizuho Corporate Bank in New York.
The dollar rose on the data, while bond prices retreated. However, stocks slipped as investors pocketed profits after markets hit a two-year high on Thursday.
The solid jobs growth failed to make a dent in the lofty unemployment rate, which remained at 9.6 percent for a third straight month, in line with market expectations.
Concern over the anemic job market was a factor behind the Federal Reserve's decision this week to pump an additional $600 billion into the economy through government bond purchases to push interest rates down further and stimulate demand.
The U.S. central bank, which cut overnight interest rates to near zero in December 2008, had already bought about $1.7 trillion in government debt and mortgage-linked bonds.
Analysts said the data was not strong enough to knock the Fed off its new policy course, but it tempered speculation the central bank might have to step up its bond buying.
"It's still probably not enough to get the Fed convinced the unemployment rate is going to go down or inflation is going to go up," said John Canally, an economist at LPL Financial in Boston. "But this is certainly a good kick-start."
The economy would need to create at least 125,000 jobs a month on a sustained basis to make a noticeable dent in unemployment. Still, private hiring has come in above 100,000 in each of the past four months -- an encouraging sign.
"That's not good enough, the unemployment rate is still unacceptably high and we've got a lot of work to do," President Barack Obama said at the White House.
Anger over joblessness helped the Republican Party wrest control of the House of Representatives from Democrats in elections on Tuesday, which were viewed as a referendum on Obama's economic policies.
In his remarks, Obama renewed a call for small business tax breaks, new infrastructure spending, aid for the jobless and an extension of soon-to-expire tax cuts for the middle class.
House Republican leader John Boehner said tax cuts for wealthier Americans also needed to be extended. "Stagnant and stubbornly high unemployment makes clear why permanently stopping all the looming tax hikes should top Washington's to-do list this month," he said.
The payrolls data was the latest in a series of recent signs that economic growth is firming somewhat. Other reports have shown growth in both the manufacturing and service sectors in October.
Jobs growth in October was supported by the private service-providing sector, where employment jumped by 154,000.
Temporary help services, a harbinger of permanent hiring, increased 34,900 from 23,800 in September. Hiring at retailers, in the health care sector and at restaurants was also strong.
But manufacturing payrolls fell 7,000 after declining 2,000 in September. Construction firms unexpectedly added 5,000 workers, helping payrolls in the goods-producing sector to rise 5,000 after falling 4,000 in September.
The average workweek increased to 34.3 hours from 34.2 hours in September, another sign economic activity was expanding.
Local government payrolls, which contributed to sinking government employment in September, fell 14,200 in October. There was a small drag on government employment from the departure of 5,000 workers hired temporarily to conduct the decennial census.
[Source: By Lucia Mutikani, Reuters, Washington, 05Nov10]
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