US job growth outpaces expectations in October
The US economy added 204,000 nonfarm payrolls in October, as businesses continued to ramp-up despite the government shutdown. Job creation exceeded forecasts by some-80,000. Official government data exceeded the ADP Institute’s prior estimate, which showed the economy added 130,000 payrolls last month.
Economists forecasted a much steeper drop in overall business activity amid the 16-day budget impasse, which is believed to have cost the economy $24 billion. As many as 800,000 government workers were furloughed during the shutdown.
Job growth has averaged 190,000 per month over the past 12 months, as the US economy continues to put recession behind it. Most of the gains were concentrated in leisure and hospitality, retail, professional services, manufacturing and healthcare, the Labor Department report showed. Average hourly earnings grew 0.1 percent and at an annualized rate of 2.2 percent.
The creation of 204,000 jobs failed to shift the unemployment rate, which remained steady at 7.3 percent. However, the workforce declined by 720,000 in October, shifting the labour force participation rate down to 62.8 percent. Labour force participation tracks the number of Americans currently employed or actively searching for work. Labour force exits aren’t tracked under the official unemployment rate.
The rate of job creation suggests businesses maintained their hiring plans amid the government furlough. Manufacturing activity grew at the fastest pace in 2 ½ years in October, according to the Institute for Supply Management. The service economy grew for a 46th consecutive month in October, led by an increase in business activity. Service employment grew for a 15th consecutive month, according to ISM.
“The economy isn’t as weak as people seem to think it is in the fourth quarter,” said Joseph LaVorgna of Deutsche Bank Securities Inc. October payroll numbers show employers are optimistic about business conditions leading up to the active holiday season.
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