Payrolls jumped 204,000 as economy weathers shutdown
(c) 2013, Bloomberg News.
WASHINGTON — American employers added more workers to payrolls in October than forecast by economists, betting that the world's largest economy would weather the impact of the federal government shutdown.
The addition of 204,000 workers followed a revised 163,000 gain in September that was larger than initially estimated, Labor Department figures showed Friday in Washington. The median forecast of 91 economists surveyed by Bloomberg called for an increase of 120,000. The jobless rate rose to 7.3 percent from an almost five-year low.
The figures indicate companies adhered to hiring plans with an outlook for stronger sales in the aftermath of the 16-day budget impasse and a debate over raising the nation's debt ceiling. Treasuries fell on speculation the report will prompt the Federal Reserve to accelerate a withdrawal of stimulus.
"The government shutdown really didn't have a material impact on employment," said Brian Jones, senior U.S. economist at Societe Generale in New York, whose forecast for a payroll gain of 175,000 was the highest in the Bloomberg survey. "The labor market is actually quite healthy, regardless of what people may think. The economy is doing better."
Payrolls increased at manufacturers by the most since February, retailers added about twice as many workers as the month before, and leisure and hospitality employment was the strongest in six months.
Among those finding work was Blair Landen, 22, who was hired in October after her one-month internship at rehabilitation-product maker Saebo Inc.
She had been looking for positions since the spring, before her graduation from the University of North Carolina at Chapel Hill. When applying and interviewing for jobs yielded little, she started networking, creating a spreadsheet with about 70 contacts that eventually helped her find her current position.
"It was a very frustrating process," said Landen, who now lives in Charlotte. "When you talk to 10 people, you might have one person who has a lead on a company that's hiring right now — maybe. It's kind of like a never-ending cycle."
Retailers boosting hiring ahead of the holiday shopping season include Amazon.com Inc. The world's largest online retailer is creating more than 70,000 full-time seasonal jobs in its U.S. fulfillment centers and expects to convert "thousands" of those positions to permanent roles after the season ends as it did in 2012, according to a statement.
Bloomberg survey estimates ranged from increases of 50,000 to 175,000. Revisions to prior reports added a total of 60,000 jobs to overall payrolls reports in the previous two months. The report, delayed by the shutdown, was originally slated for Nov. 1.
The difference between Friday's outcome on payrolls and the average estimate of economists surveyed by Bloomberg was 3.4 times larger than the poll's standard deviation, or the average divergence between what each economist forecast and the mean. That was the biggest surprise since April.
The unemployment rate, derived from a separate Labor Department survey of households rather than employers, was forecast to rise to 7.3 percent from September's 7.2 percent, according to the Bloomberg survey median. The household figures showed more Americans dropped out of the labor force.
As many as 800,000 federal workers were furloughed during last month's government shutdown. The Labor Department, in its survey of 60,000 households, extrapolated the effects of the impasse to arrive at the unemployment rate. Americans who weren't working during the week spanning Oct. 6 to Oct. 12 were counted in the household survey as unemployed, even if they received, or anticipated getting, pay retroactively, based on a statement from the Bureau of Labor Statistics.
"You really want to see how the job market does in November before making any assessments about the underlying health of the job market," said Ryan Sweet, a senior economist at Moody's Analytics Inc. in West Chester, Pa., who correctly projected the rise in the unemployment rate to 7.3 percent. "There are a lot of things pushing and pulling on the October numbers."
The separate survey of employers asked about the pay period that includes the 12th of the month, and anyone receiving pay for any part of the period was counted as part of the payroll tally, the Labor Department said.
The participation rate, which indicates the share of working-age people in the labor force, decreased to 62.8 percent, the lowest since March 1978, from 63.2 percent a month earlier.
Private employment, which excludes government agencies, rose 212,000 after a revised advance of 150,000. They were projected to rise by 125,000, the survey showed.
Factories added 19,000 workers in October, reflecting in part gains in the automobile industry. Retailers added 44,400 jobs and employment in the leisure industry climbed 53,000.
Government employment decreased by 8,000 in October as federal agencies cut payrolls.
Average hourly earnings increased by 0.1 percent to $24.10 in October from the prior month, and climbed 2.2 percent over the past 12 months.
The average work week for all private workers held at 34.4 hours in October.
Workers at America's top federal contractors were among those affected by the lapse in appropriations. Lockheed Martin Corp., which had $36.9 billion in government contracts in 2012, put 2,400 workers on leave the second week of October.
URS Corp., a provider of engineering and construction services, furloughed about 3,000 employees, saying the total includes employees idled by the closing of a government facility where they work as well as those directed by U.S. officials to halt operations or cut staffing.
A report yesterday showed household purchases and business spending on equipment slowed in the third quarter, even as buildup in inventories unexpectedly boosted the pace of economic growth.
The 2.8 percent annualized gain in gross domestic product followed a 2.5 percent increase in the prior three months, Commerce Department figures showed. Final sales, which exclude unsold goods, rose 2 percent in the third quarter as consumer spending climbed at the slowest pace since 2011 and corporate investment fell.
In the three months ended in September, payrolls climbed 143,000 on average, less than the 195,000-a-month gain in the first half of 2013. Through September, the U.S. had recovered 7 million of the 8.7 million jobs lost as a result of the 18-month recession that ended in June 2009.
Fed policy makers said last week they needed to see more evidence the economy will continue to improve before they trim $85 billion in monthly purchases of Treasury and mortgage debt. Fiscal policy "is restraining economic growth," the Federal Open Market Committee said Oct. 30 at the end of a two-day meeting in Washington.
_ With assistance from Chris Middleton and Michelle Jamrisko in Washington.