Hiring up in October despite government shutdown

U.S. job growth unexpectedly accelerated in October despite the government shutdown, according to figures released Friday that suggested the budget standoff had a more limited impact on the economy than many initially feared. But the better-than-expected numbers are tempered by a wider economic picture still adversely affected by the lingering effects of the recession.

The Labor Department’s latest report on payrolls said employers added 204,000 jobs in October — an unpredicted burst of hiring in a month when the federal government was closed for 16 days and hundreds of thousands of government workers were furloughed.

The news seemingly cheered the markets, with the Dow Jones industrial average closing Friday at an all-time high. 

The Labor Department said the unemployment rate rose to 7.3 percent, from 7.2 percent in September, likely because furloughed federal workers were counted as unemployed. The report noted that the shutdown did not affect total jobs. The previous two months of job growth figures were also revised, showing that 60,000 more jobs were added than earlier estimated.

Friday’s figures suggest hiring has picked up in the fall. Employers added an average of 202,000 jobs from August through October, up from 146,000 from May through July.

Despite the impressive job gains, the percentage of Americans working or looking for work fell to a 35-year low. While that figure was likely distorted by the shutdown as well, the trials of an economy still struggling to regain its footing in the aftermath of the recession run deeper than the overall job indicators.

Federal Reserve Chairman Ben Bernanke, speaking at an event after the report was released, said he saw an "awful lot of slack" in the labor market, and that the jobless rate could still fall further.

Dennis Lockhart, president of the Atlanta Fed and John Williams, president of the San Francisco Fed, speaking at separate events, said they were encouraged by the October job gains, but warned against reading too much into one month of data.

Of the new jobs added, more than a third were in food service or retail sectors. Recent reports suggest that having employment in those industries is no guarantee of economic livelihood.

For example, a recent report indicated that more than half of fast food workers require public assistance. The Bureau of Labor Statistics said the average annual salary for a retail worker was just over $20,000 per year, below the federal poverty line of $23,492 for a family of four. 

And overall, according to the Social Security Administration (SSA), the strength of wages has declined in the last decade and a half. Median wages in the U.S. are currently at their lowest point since 1998. 

About 800,000 government workers were furloughed for all or part of the shutdown, from Oct. 1 through Oct. 16. Many were counted as unemployed and on temporary layoff for purposes of the unemployment rate.

But the furloughed workers were still counted as employed by the government’s survey that counts jobs, because they were ultimately paid for their time off. Federal government jobs fell by only 12,000 last month.

Some reports have hinted that hiring has been improving. Retail stores, shipping companies and other services firms stepped up hiring in October, according to a private survey of service companies. The private sector accounted for all the job gains last month.

Additionally, the number of people seeking unemployment benefits has fallen back to pre-recession levels after four weeks of declines. The steady drop suggests companies are cutting fewer jobs.

Economic growth accelerated in the third quarter to an annualized rate of 2.8 percent, the government said Thursday. That figure is up from 2.5 percent in the second quarter.

Al Jazeera with wire services. With additional reporting by Tom Kutsch.