October jobs report expected to show slow growth
By Neil Irwin,
A new report due out Friday morning will show whether the job market stayed on an even keel as the final quarter of the year began.
So far, signs have pointed to employers who are shrugging off the ill effects of Europe’s troubles and volatile financial markets and continuing to hire at a slow, gradual pace. Indeed, the September unemployment report relieved concerns about massive waves of layoffs, and last week the Commerce Department said that the economy grew at a 2.5 percent annual rate in the late summer months, its fastest clip in a year.
And on Thursday, the Labor Department reported that that the number of people filing new claims for unemployment insurance benefits fell last week to 397,000, from a revised 406,000 the previous week. That was the lowest level in five weeks. Also Thursday, a survey from the Institute for Supply Management on activity at the nation’s service businesses was little changed, at 52.9 in October (from 53 in September). Numbers above 50 indicate expansion.
With most indicators showing weak but steady improvement in the labor market, analysts predict that the October jobs report will draw a similar picture. The consensus of economists surveyed by Bloomberg News predicts that employers will have added 95,000 jobs last month. That would be down from the 103,000 added in September, but it would actually would show a slight improvement in job creation, because the September number was inflated by striking telecommunications workers returning to work.
October’s numbers are not receiving the same intense attention that the labor report has drawn in the last couple of months. Fears of a double-dip recession have eased in the last several weeks, as economic data has been a bit more upbeat and financial markets have been more stable (at least until the last week, as Europe’s financial health veers toward crisis and Greek leaders have triggered fears that the nation might not agree to a rescue package).
Nonetheless, the growth picture remains uncertain, and the monthly job report is the most solid indicator of what is going on in the economy right now.
Analysts expect the unemployment rate to be unchanged at 9.1 percent for the fourth straight month, a grim reminder that job growth in this range is not enough to bring down unemployment. The U.S. labor force is always growing, and around 125,000 new jobs a month must be added just to keep up with an increasing population.
The analysts’ expectations for job creation fall in line with a new forecast from the Federal Reserve this week that suggests that the nation’s unemployment rate will decline at a glacial pace. The Fed now projects that unemployment will be around 8.6 percent in late 2012.
It is also expected that the October report will reflect a trend: that the private sector is hiring at a steady clip even as state and local governments are shedding jobs, dragging overall job creation totals down. Analysts expect the private sector to add 125,000 jobs and that the public sector will have slashed 30,000 jobs.