With the presidential election just days away and an apparent dead heat, the government reported Friday that employers added a stronger-than-expected 171,000 jobs, a boost to President Barack Obama’s argument that the economy is steadily improving.
But giving ammo to Republican rival Mitt Romney, the U.S. Labor Department also reported that the unemployment rate ticked up a tenth of a percentage point to 7.9 percent. That means the jobless rate in the final employment report before elections is higher than when Obama took office.
“The labor market is improving in a relative sense, but still weak in a relative sense. But, if you are an Obama supporter, you will focus on the former. If you are a Romney supporter, you will focus on the latter,” said Neil Dutta, director of research for Renaissance Macro Research, in a note to investors. “We believe that consumer perceptions of the economy have largely solidified already; however, the trend favors the incumbent.”
Private-sector employment actually rose by 184,000 – far above the mainstream economist forecast of 125,000 jobs and the largest such gain in eight months. However, a net loss of 13,000 government jobs dragged down the overall non-farm employment number for October.
In another sign of improvement, the Bureau of Labor Statistics also revised upwards its estimates for August and September, saying there were actually a combined 84,000 additional jobs in those months.
“Solid job report. Businesses remain stalwart in their hiring, despite their growing nervousness over the fiscal cliff,” said Mark Zandi, chief economist for Moody’s Analytics, referring to the tax and budget issues that must be resolved in an upcoming lame-duck session of Congress. “The job gains are also broad-based across industries, including construction, where a lot of the future job growth has to come from.
For the year, non-farm payroll employment has grown by an average of 157,000 jobs per month, the BLS said. Over the past four months, it’s been about 173,000. That’s an important average because economists believe that about 150,000 new jobs a month are needed just to keep pace with new entrants into the work force and to begin knocking down the jobless rate.
Coming less than 100 hours from the start of national elections, Friday’s jobs report prompted quick responses from Democrats and Republicans alike.
“Four years of persistently high unemployment and long-term joblessness might be the best President Obama can do – but it’s nowhere near what the American people can do if we get Washington out of their way,” House Speaker John Boehner, R-Ohio, said in a statement.
Soon afterwards, Romney released a statement that looked past the positive jobs numbers.
“Today’s increase in the unemployment rate is a sad reminder that the economy is at a virtual standstill. The jobless rate is higher than it was when President Obama took office, and there are still 23 million Americans struggling for work,” he said in a statement. “On Tuesday, America will make a choice between stagnation and prosperity.”
Appearing on CNBC shortly after financial markets opened, Alan Krueger, head of the White House Council of Economic Advisers, hit back at the Romney statement. The unemployment rate, Krueger said, has come down a full percentage point over the past 12 months.
“I think we see a picture of an economy that’s healing,” he said, repeating later in his blog that the jobs report provided “further evidence that the U.S. economy is continuing to heal from the wounds inflicted by the worst downturn since the Great Depression.”
Within Friday’s numbers, there were signs of encouragement because the gains were broad and across every sector except government. The category of professional and business services, which encompasses better-paying white-collar jobs, rose by 51,000 jobs. Health care, a constant source of upward momentum, gained another 31,000 jobs. Retailers, ramping up for the holidays, added about 36,000 jobs.
Among the most encouraging signs, the hard-hit construction sector added 17,000 jobs amid signs that housing starts are thawing and returning to life. When the economy kicks into higher gear, it’s likely to be felt in hiring of construction workers for residential and commercial building.
“There was good news in both construction and retail employment, consistent with the better news coming in from the housing market and with an improving consumer mood,” Nigel Gault, chief U.S. economist for forecaster IHS Global Insight, said in a research note.
Manufacturers added another 13,000 jobs in October, not a robust number but in line with expectations, and business investment remains flat amid worries about how Congress will resolve debt and tax issues in the final two months of this year.
“Manufacturers remain quite anxious about slowing global sales and the impending fiscal cliff. The fiscal shock study released last week by the NAM shows that Washington’s failure to address the fiscal cliff has already negatively impacted (the Gross Domestic Product) by 0.6 percent this year,” Chad Moutray, chief economist for the National Association of Manufacturers, wrote in his blog Shopfloor.org. “Manufacturers are looking to Washington for leadership to address the serious challenges they face so they can grow and create jobs.”