Jobs Up 204k in October, Unemployment Rate Up to 7.3%
The Labor Department reported Friday that the economy gained 204k jobs in October. The unemployment rate rose to 7.3%. The payroll number was higher than expected. Economists attribute the rise in the unemployment rate to last month's government shutdown. The payroll number, however, was not affected by the shutdown.
Almost half the job gains were in leisure, hospitality and retail. The leisure and hospitality sector added 53k jobs in October, almost double its monthly average for the year. Retail added 44k jobs, higher too than its monthly average for the year. Consumer spending remains weak, so its unlikely these new positions are in response to new demand. The new positions are possibly an attempt to bring down the overall number of hours worked for all employees, in response to ObamaCare.
The overall October report is something of an aberration. It reminds us that the jobs report is really made up of two different surveys. The payroll number is derived from a survey of businesses, asking the number of workers on their payroll. Because furloughed federal workers received back-pay, they still count as being in jobs. The shutdown's only affect on this number would be if private contractors laid off workers during the shutdown, although this impact is likely small.
The unemployment rate is calculated from a larger survey of households, asking respondents if they are currently working. Because the survey was taken during the shutdown, the unemployment rate is affected by the roughly 400,000 federal workers who were not working at that time.
Over the last year, the economy has averaged 190k new jobs each month. This level is below the amount of job creation necessary to keep pace with population growth. Many more jobs than this, however, are needed to trim the ranks of the long-term unemployed and bring discouraged workers back into the labor force.