WSJ
WASHINGTON -- U.S. unemployment rose by more than expected in October to hit its highest level in more than 26 years and employers cut more jobs than forecast, a sign the labor market continues to struggle as the economy emerges from its deep recession.
The unemployment rate, calculated using a survey of households as opposed to companies, rose by 0.4 percentage point to 10.2%, the Labor Department said Friday. Economists surveyed by Dow Jones Newswires had forecast an increase to 9.9%.
Nonfarm payrolls fell by 190,000 last month, with the largest job losses in construction, manufacturing, and retail trade. Economists had expected a 175,000 decrease.
Since the start of the recession in December 2007, the number of unemployed has increased by 8.2 million and the unemployment rate has grown by 5.3 percentage points.
The unemployment figures for October strengthen the Federal Reserve's view that interest rates should remain at record lows to bolster a fragile recovery.
The U.S. central bank Wednesday cited "low rates of resource utilization" as one of the key reasons why it expects its benchmark rate to remain close to zero for an "extended period." The high jobless rate is a clear indicator of low rates of resource utilization.
In the past, the Fed has started to hike interest rates only several months after the jobless rate peaked.
Though still a terrible loss by historical standards, the payroll data reflects some improvement. Monthly job cuts in January 2009 totaled 741,000, for example.
More recent employment data out Thursday had shown some improvement in the labor market. New claims for unemployment benefits decreased by 20,000 to 512,000 in the week ended Oct. 31, the lowest level since Jan. 3.
The high unemployment numbers come a day after Congress approved an extension of federal jobless benefits for up to another 20 weeks, sending the bill to the White House for President Barack Obama's signature.
President Barack Obama this week warned that job losses are likely to continue in the weeks ahead.
"We are just not where we need to be yet. We've got a long way to go," Obama told a meeting of the President's Economic Recovery Advisory Board on Monday.
The U.S. economy expanded in the third quarter for the first time in more than a year, growing an annual 3.5% as the government's stimulus boosted consumer spending. The productivity of U.S. workers surged over the same period.
However, weakness in the labor market is expected to weigh on the recovery. The usual pattern in economic recoveries is that productivity rises first, then employment follows.
Friday's report showed that average hourly earnings rose by 0.3%, or $0.05, to $18.72.
Employment in the service sector -- the main source of U.S. jobs -- fell 61,000 in October. Business and professional services companies shed 18,000 jobs. Retail trade cut 40,000 jobs and leisure and hospitality employment fell by 37,000.
Employment in government was unchanged last month from September.
The average workweek was also unchanged at 33.0 hours in October.
NYT
The United States economy shed 190,000 jobs in October, and the unemployment rate reached a 26-year high of 10.2 percent, up from 9.8 percent in September, the Department of Labor said Friday in its monthly economic appraisal.
While the pace of job losses has slowed significantly since the peak of the recession last winter, the unemployment rate, which measures the number of people actively seeking work, continues to climb, and economists do not foresee relief until well into next year.
“There’s no doubt that the slashing and burning of jobs has abated quite a lot,” said Allen L. Sinai, the founder of Decision Economics, a research firm. “The economy is recovering, but it is a very soft recovery.”
The biggest losses came in the construction, manufacturing and retailing sectors. Health care companies added 29,000 jobs to their payrolls, and the number of temporary workers increased by 34,000 — a significant gain that could indicate employers are beginning to expand their businesses again.
The Labor Department also revised September’s losses to 219,000 from 263,000.
Dean Baker, a director for the Center for Economic and Policy Research, said he did not expect declining unemployment rates until next spring. “We may be looking at very high levels,” Mr. Baker said, “barring a policy response, for several years into the future.”
The dissonance of the economic recovery, with steep job losses coming even as production intensifies and companies show better-than-expected profits, has placed policy makers in a delicate position.
On Thursday, in anticipation of the unemployment report, Congress overwhelmingly voted to extend benefits for jobless workers for up to 20 weeks. That will soothe the short-term financial pain of many families, but demands for a new wave of government relief may intensify if companies continue to cut back.
So far, the federal stimulus package has injected billions into local economies, giving states money, for instance, to finance construction projects or retain teachers. The housing and auto sectors have been propped up with government credits meant to encourage spending. But weak consumer demand and hefty labor costs are still forcing many employers to cut positions and reduce hours to survive.
The recession has forced many Americans to settle for part-time work because companies are reluctant to add full-time employees. The underemployment rate, which includes part-time workers, the jobless and those who have given up on searching, was 17.5 percent in October — the highest level since at least 1994.
Even as unemployment remains high, there are signs that critical industries are gaining steam.
The manufacturing sector, considered the engine of the economy, was given its most optimistic bill of health in three years by a private group on Monday. Manufacturers added jobs for the first time in 15 months in October, the group said, largely by bringing in temporary workers or recalling laid-off workers. Economists say that the first sign of recovery in jobs will be when more companies begin bringing in temporary workers.
The economy expanded at a 3.5 percent annual rate in the third quarter, ending a year of back-to-back contractions. But whether that economic expansion will translate into immediate job creation is still widely debated.
“You can’t force businesses to use their profits to hire,” Mr. Sinai said.
Consumer confidence is still low, and many economists believe an economic turnaround will not come until consumers feel at ease again. With families taking home smaller paychecks each month, that could take time.
For the 15.7 million Americans who were without work in October, Friday’s data did little to change the realities of their daily lives — mornings spent combing online job sites, afternoons devoted to fighting off bill collectors. Their résumés will still go out, their interviews will go on, and, more likely than not, their phones will not ring.
Melissa Grodhaus, 42, a laid-off cemetery worker from Winona, Ohio, said she had filled out 150 applications since she lost her job nearly two years ago. She struggles to keep up with mortgage payments and utility bills, and she must also take care of her three children.
“There’s nothing here,” she said. “I can’t see anything worse than it is right now.”
Ms. Grodhaus has started selling old clothes on eBay, and she has told her children she cannot afford to pay the fees for school sports this year. Every two weeks, when the local church brings out food baskets, she rushes to pick up her share. Within minutes, she said, they are gone.
No time for comment.
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F. Douglass
