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Nation Gained Few Jobs In Oct.

By Nell Henderson
Washington Post Staff Writer
Saturday, November 5, 2005

U.S. job growth stalled last month, the Labor Department reported yesterday, suggesting that employers remained cautious about hiring because of high energy prices.

The nation's unemployment rate fell to 5 percent in October from 5.1 percent in September and has averaged 5 percent the past five months.

Employers added only 56,000 jobs, just about a third of the number that many economists estimate is needed to keep up with population growth. The gain left the total number of payroll jobs "little changed," said Kathleen P. Utgoff, the commissioner of labor statistics.

"The relatively weak increase" reflected slower job growth across the country, possibly because of the surge in energy prices caused by hurricanes Katrina and Rita, Utgoff said in a written statement. Analysts have noted that reconstruction has already begun to create jobs and will produce more in coming months.

"The U.S. economy continues to roll along, but the one-two punch of hurricanes and energy costs have definitely made it wobble," said William Cheney, chief economist of John Hancock Financial Services Inc.

Katrina hit in late August and was followed by Rita in late September. Both pummeled the Gulf Coast, wiping out thousands of homes and workplaces. The storms also damaged oil rigs, refineries and pipelines, which sent prices up for gasoline, diesel fuel, jet fuel and natural gas. Hurricane Wilma struck Florida last month but reached land after the October employment data were collected. Therefore it did not affect the report released yesterday, the Labor Department said. Job growth was essentially flat in September, largely because of the damage inflicted by Katrina and Rita. Hiring remained brisk outside the Gulf Coast region, the department said.

Employers were worried in early October about where energy prices were headed and about how consumers would react, analysts said. Many businesses trimmed payrolls or thought twice about hiring.

Auto dealers, department stores, clothing boutiques, hotels, bars and restaurants all cut jobs last month, the department reported, after adjusting for seasonal variations.

The decline in auto dealership employment matched the plunge in car and truck sales last month after strong sales this summer.

The job losses in hotels, restaurants and retailing "may simply reflect the tribulations of the tourist industry in the Gulf Coast region, but it may also be a sign of consumers finally reacting to the impact of energy costs on their discretionary spending power," Cheney said.

John E. Silvia, chief economist at Wachovia Economics Group, said, "My suspicion is that employers are being very cautious about hiring in these areas because they are very unsure of the strength of consumer demand going forward."

Oil and gasoline prices have eased since September, and consumer spending has held up so far. Major chain-store retailers reported Thursday that sales were stronger than expected.

Efforts to start rebuilding the areas ravaged by the hurricanes helped the construction industry add 33,000 jobs in October, higher than its average gain of about 20,000 a month in the previous six months, noted Raymond W. Stone, an economist at Stone & McCarthy Research Associates.

"We suspect that further and potentially much larger gains in construction payrolls are likely" in the months ahead, Stone wrote in an analysis for clients.

Manufacturers added 12,000 jobs in October but would have posted a loss if not for the 18,000 Boeing Co. airplane machinists who returned to work after a strike.

Local governments, health care providers, temporary employment agencies and financial services companies also added workers.

The unemployment rate for white workers fell to 4.4 percent in October from 4.5 percent in September, the Labor Department said. The rate for black workers declined to 9.1 percent -- their lowest jobless rate in four years -- from 9.4 percent. The rate for Latinos fell to 5.8 percent from 6.5 percent.

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