WASHINGTON — Democrats and newly empowered Republicans remain gridlocked on economic policy, but the October unemployment report offered a ray of hope: the most upbeat jobs numbers in months.
U.S. employers topped predictions by adding 151,000 workers across most industries, and Labor Department revisions reduced employment losses by more than 100,000 in the previous two months.
The brightening outlook in Friday’s report came three days too late to boost President Barack Obama and congressional Democrats, who were trounced in Tuesday’s midterm elections.
Nor were the October gains, nearly all in the private sector, enough to trigger a decline in the nation’s unemployment rate, which remained at 9.6 percent, hovering near a 26-year high.
The Bureau of Labor Statistics said that 14.8 million American workers were still idle nearly three years after the onset of the worst financial crisis since the Great Depression, and that another 2.6 million people weren’t counted because they didn’t seek work in the four weeks before the survey.
But the data produced new sprouts of optimism.
“The job market is finally gaining traction,” said Mark Zandi, the chief economist at Moody’s Analytics. “Businesses appear to be slowly getting their groove back. The October job gain was sizable and broad-based across industries.”
Zandi said that an increase in weekly hours worked and a net 300,000 rise in the hiring of temporary workers since August “suggests even better job gains are coming.”
That’s crucial, said Heidi Shierholz of the Economic Policy Institute, because at October’s growth rate, “the economy would achieve pre-recession unemployment rates _ 5 percent _ in roughly 20 years.”
Although one favorable report doesn’t change that picture, said Nigel Gault, the chief U.S. economist for IHS Global Insight, the October report reduces chances of “the dreaded ‘double dip’ ” recession, and “as that risk is seen to recede, businesses and households may become more confident to hire and spend.”
The Republicans’ capture of the U.S. House of Representatives signaled the likelihood of worsening deadlock, especially because of the lengthy political impasse over fixing the economy. It not only doomed faint prospects for congressional passage of a second stimulus program to spur hiring, but GOP leaders also are pressing for federal budget cuts that could cost more jobs.
With limited options, the Federal Reserve Board this week launched an unprecedented effort to buy $600 billion in Treasury bills in a circuitous plan aimed at driving down long-term interest rates to encourage businesses to expand, but there’s no certainty that it will work.
Economists had expected only 60,000 in net job gains in October, and many had predicted a jump in the unemployment rate because of the steady stream of new entrants to the job market.
"Big and midsized companies are very profitable and their balance sheets are strong," Zandi said. "It’s no longer a question of whether businesses can hire, it is a question of their willingness. Today's numbers suggest they are becoming more willing.”
Obama, who embarked later Friday on a trip to India and three other Asian nations to push his goal of opening world markets and doubling U.S. exports over the next five years, hailed the private sector’s creation of 1.1 million jobs over the last 10 months and more than 100,000 in each of the last four months. He offered both an olive branch and some stern talk to Republican leaders, who’ve set their own goal of ousting him in 2012.
In a brief statement at the White House, Obama said that he was “open to any idea, any proposal, any way that we can get the economy moving faster.” He also gently reaffirmed his position on extending individual tax cuts due to expire Dec. 31, saying that he favors “keeping tax rates low for middle-class families,” but giving no sign of whether he'd support renewing the breaks for the wealthiest Americans as well.
Obama warned that “the most important competition we face this century will not be between Democrats and Republicans. It’s the competition with countries around the world to lead the global economy. Our future depends on putting politics aside to sell products, to worry about the next generation, instead of the next election. We can’t spend the next two years mired gridlock. Other countries, like China, aren’t standing still.”
Republican Rep. John Boehner of Ohio, the likely new House speaker, issued a statement underscoring the chasm between the new House leadership and the White House.
“Any job growth is a positive sign, but stagnant and stubbornly high unemployment makes clear why permanently stopping all the looming tax hikes should top Washington’s to-do list this month,” Boehner said.
However, RDQ Economics said in a research note that it now appears likely that the tax cuts for small businesses enacted during the Bush administration will be extended through 2011, and “we can perhaps look forward to a further pickup in jobs over the next few months.”
The Labor Department said that private-sector employment accounted for 159,000 job gains, but that nonfarm payrolls were offset by a slight drop in the federal, state and local government work force.
Retail trade added 28,000 of the new jobs, including a 6,000 hike in employment at auto dealerships, while the health care industry added 24,000 workers. Food services and drinking places also expanded by 24,000, and they've added 143,000 jobs since last December, the BLS said.
The overall job picture, however, remained grim, with little improvement in the soaring unemployment rates among African-Americans (15.7 percent), Hispanics (12.6 percent) and teenagers (27.1) percent.
AFL-CIO President Richard Trumka said fixing the economy must be the next Congress’ top priority, noting that more than 40 percent of the unemployed have been out of work for more than six months and that hundreds of thousands of those idled will lose unemployment benefits by the end of this month.
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