Friday, November 2, 2012

Job Creation Surged in October as Unemployment Ticks Up

The U.S. economy created 171,000 jobs in October, well above the 6-month average job creation of 137,000 jobs. In addition, September and August job creation was revised up, adding 84,000 jobs more than had initially been reported. Despite the strong job growth the unemployment rate ticked up to 7.9% due primarily to increasing labor force participation. Job growth has picked up in the past three months, averaging 170,000, much better than the 67,000 averaged in the second quarter.

Job creation continues to be driven by the service sector, although by a lesser degree. The public sector added 150,000 jobs in October, its weakest growth since June when the overall economy added just 45,000 jobs. October’s job growth was boosted by the goods producing sector resuming hiring, adding 21,000 jobs. Government returned to dragging on growth in October, shedding 13,000 jobs.

Despite the strong job creation, the unemployment rate ticked up to 7.9%. This was primarily due to a large increase in the labor force, which outpaced employment growth, rising 578,000. This increase led the labor force participation rate to rise to 63.8%.

It is important to note that the job creation figures used to calculate the unemployment rate come from a different survey than the headline job growth numbers. The household survey, used to calculate unemployment, tends to be more volatile than the establishment survey that reports job creation.

The BLS noted that Hurricane Sandy had no discernible effect on employment and unemployment data for October. The household survey was collected before the storm, and the establishment survey data collection rates were within normal ranges both nationally and in affected areas.

Read the BLS report.

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