U.S. adds jobs in October but not enough to lower unemployment
11/05/2010 4:16 pm EST
Not only is it driving down interest rates, creating stock market rallies around the world and making whites whiter, but the $600 billion Treasury-buying spree announced by the Federal Reserve on November 3 produced greater than expected hiring gains in October. For the month nonfarm payrolls in the United States showed an increase of 151,000 jobs. That was a big pickup from the revised September loss of 41,000 jobs and the 159,000 jobs added in the private sector was well ahead of September’s 107,000 gain and also of expectations among economists for a 60,000 gain.
I’m kidding, of course. No way that a program announced on November 3 results in job gains in October.
And remember that the Fed knew this number before making that November 3 decision by buy $600 billion in Treasury bonds.
Although adding a net 159,000 jobs in he private sector is sure better than a poke in the eye with a statistical anomaly, it still qualifies as weak growth. Economists estimate that the economy needs to add at least 100,000 private sector jobs a month to stabilize unemployment. That seems to be where we are with unemployment stable at 9.6% and the economy adding 100,000 or more private sector jobs in each of the last four months.
But the economy needs to generate at least 200,000 to 300,000 jobs a month in order to start eating into the unemployment rate. The U.S. economy needs to grow significantly faster to hit that goal. And it’s that weakness that the Fed’s program of quantitative easing is supposed to address.
The data from the Bureau of Labor Statistics showed improvement in the average workweek and hourly earnings as well as in the headline jobs number. Average hours worked climbed to 34.3 a week from 34.2. Not gangbusters growth but movement in the right direction. Hourly earnings increased by 0.2% for October. That was slightly above consensus projections of a 0.1% increase. With workers making more per hour and working more hours, weekly earnings grew by 0.7%. (That should bring some cheer to retailers. Consumers spend more readily when paychecks are growing.)
The numbers are still too weak but the trend is showing more consistency (four data points is better than two) and moving in the right direction.
Now if the unemployment rate would just start to come down.
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