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Nation Adds 171k Jobs in October; Unemployment Rate Up to 7.9%

The nation’s unemployment rate inched up to 7.9 percent in October as the economy added 171,000 jobs, the ""Bureau of Labor Statistics (BLS)"":http://www.bls.gov/news.release/pdf/empsit.pdf reported Friday.

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The labor force--the sum of employed and unemployed--improved in October, causing the bump in the unemployment rate and signaling renewed confidence among those on the sidelines that jobs are available.

Job creation for the two prior months was revised upward: 148,000 in September instead of the originally reported 114,000 and 192,000 instead of the 142,000 reported in August.

Economists expected payrolls to grow by 125,000 and the unemployment rate to remain flat to September’s 7.8 percent.

Average hourly earnings of production workers slipped to $19.79 from $19.80 and average hourly earnings of all workers also fell by a penny to $23.58. With average weekly hours of all workers unchanged at 34.4, weekly earnings dropped to $811.15 from $811.50. However since jobs went up, aggregate earnings rose for the third straight months, boosting consumer purchasing power.

The data were not directly affected by Hurricane Sandy, though the storm shut government offices for two days. BLS uses data received through Monday of the week of the release from participants in its establishment or payroll survey. Indeed, 72.0 percent of those surveyed had responded by Monday compared with the average response rate of 72.8 in the first nine months of this year.

With its mixed results, the report provides fodder for both President Barack Obama and Governor Mitt Romney four days before Election Day. While the October numbers mark 25 straight months of job growth (and 32 months of private sector job growth), the labor force saw a decline of 369,000, indicating more workers are becoming discouraged at the pace of job creation. The U-6 number, which includes people “marginally attached to the labor force” and those working part-time for economic reasons, fell only slightly to 14.6 percent.

Long-term unemployment numbers were mixed. The number of people unemployed for 27 week or longer rose 158,000 to 5,002,000. However, the “feeder” into that classification--the number of people unemployed 15 to 26 weeks--dropped 24,000 to 1,836,000.

The number of multiple jobholders rose 42,000 to 6,908,000--meaning that out of the 171,000 new jobs, 42,000 went to individuals who were already employed.

The unemployment rate among college graduates fell to 3.8 percent from 4.1 percent in September. That’s good news for the housing sector, as college graduate are more likely to be homeowners than those who did not complete college.

The report also showed an increase in “job leavers” (a data point signaling confidence in the ability to find a new job) to 1,010,000, the highest level since March. However, the number of “re-entrants” to the labor force, another signal of confidence, fell to 3,300,000 from 3,306,000 in September.

Jobs--derived from the establishment survey--showed across-the-board gains with virtually every sector showing gains. The major exception was government, which shed 13,000 jobs equally split between federal jobs (down 6,000) and state governments (down 7,000 jobs).

The professional and business services sector led job gains, up 51,000 in October, followed by retail, which added 36,400 jobs, and health care, which added 32,500.

About Author: Mark Lieberman

Mark Lieberman is the former Senior Economist at Fox Business Network. He is now Managing Director and Senior Economist at Economics Analytics Research. He can be heard each Friday on The Morning Briefing on POTUS on Sirius-XM Radio 124.
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