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A glimmer of hope for the U.S. economy is emerging from an unlikely place: the job market.

Employers added 151,000 jobs in October, the U.S. Labour Department said Friday, far more than economists expected and the first gain in four months.

The jump suggests that the economy is edging into a higher gear rather than sliding back into recession, as some have feared.

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"Given how weak this recovery has been in many respects and how elusive meaningful job growth has been, 150,000 jobs is something to savour," said Dan Greenhaus, chief economist at Miller Tabak & Co. in New York.

The report came just days after the U.S. Federal Reserve Board said it would inject more money into the economy in a bid to accelerate what it called a "disappointingly slow" recovery.

While the pace of job creation last month was a welcome surprise, it still wasn't enough to make a dent in the country's stubbornly high unemployment rate. That figure, measured in a different survey, held steady at 9.6 per cent.

Friday's report provided some clues that job creation could gather speed in the months ahead. Temporary office jobs, considered a harbinger of permanent hiring, posted a healthy increase. So did employment in the retail and health care sectors.

In another positive sign, the number of hours in the average work week and hourly earnings crept higher. Such increases put more money in workers' pockets, spurring consumption.

The data highlighted the bifurcated nature of the recovery. People who have jobs are seeing a slow increase in their purchasing power, while those who are unemployed are staying out of work for an unusually long period of time. The typical spell of joblessness stands at 34 weeks, which is higher than it was last October.

The results of Tuesday's midterm election, which swept a wave of Republicans eager to cut spending into Congress, mean that the unemployed can expect little in additional aid. Another extension of jobless benefits and further help in hanging on to health insurance appear politically unachievable.

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The new political climate means that the "unemployed are going to be bearing even more of the burden of all of the economic weakness of the U.S.," says Gary Burtless, a labour economist at the Brookings Institution in Washington. "It's amazing how it's been so concentrated on those people."

To make a meaningful change in the unemployment rate, job creation will have to rev up in a dramatic way. Simply to absorb new entrants to the work force, the U.S. economy needs to generate about 100,000 jobs a month. At October's rate of job creation, it would take roughly 20 years for the United States to return to the employment picture that prevailed prior to the start of the recession, according to an estimate by Heidi Shierholz of the Economic Policy Institute.

Nevertheless, the October report is a clear step in the right direction, prompting a number of experts to rethink their assessments of the economy's overall trajectory. At Morgan Stanley, economists cited Friday's jobs report as a factor in their decision to raise their estimate for U.S. growth in the last three months of this year to 3.5 per cent from 2.5 per cent.

"Labour market conditions are improving," they wrote. "We believe this reflects a transition from a productivity-led recovery to a modest expansion that is sustained by job and income growth."

Some businesses are becoming increasingly confident about hiring. CarMax, a used-car retailer headquartered in Virginia, announced this week that it would add 1,200 store positions in its locations across the country. The chain typically ramps up hiring ahead of the prime car buying season in the spring and summer, according to a spokeswoman. Last year, it hired only about 600 people. In April, the company announced it would resume opening new stores after freezing expansion during the downturn.

Private employers have added jobs every month this year. Between June and September, however, their hiring could not make up for large layoffs in the public sector as the government shed workers who conducted the once-a-decade census.

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About the Author
U.S. Correspondent

Joanna Slater is an award-winning foreign correspondent for The Globe based in the United States, where her focus is business and economic news and New York City.Her career includes reporting assignments in the U.S., Europe and Asia. In 2015, she was posted in Berlin, Germany, where she covered Europe’s refugee crisis. More

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