Employment Growth Returns in October

By Toni Vranjes

November 5, 2010

This week’s election results showed the depths of the public’s anxiety about the job market, but the latest unemployment report provides a glimmer of hope.

Payrolls jumped for the first time in several months, as employers created 151,000 new jobs in October. The last time the economy added jobs was in May, when payrolls increased by 432,000.

However, the unemployment rate didn’t move, staying at 9.6 percent.

The October payroll numbers beat expectations. Nigel Gault, chief U.S. economist for IHS Global Insight, had predicted the economy would add 100,000 jobs. He says the report includes several positive signs, including a longer workweek and encouraging revisions to payroll numbers from previous months.

Last month, employment in the private sector grew by 159,000. Growth occurred in many sectors, including temporary help, retail trade, food services, health care, and education.

Despite the encouraging news, the October jobs report also includes some worrisome signs, including the high “underemployment rate,” which stands at 17 percent. That measure includes part-time workers who would prefer full-time jobs, as well as people who have dropped out of the labor force.

Another concern is the high number of long-term unemployed. About 6.2 million people have been out of work for 27 weeks or longer, according to the Labor Department.

The recovery is going to be a long and slow process, Gault emphasizes.

It’s getting harder for companies to grow solely by squeezing more work out of existing staff, he notes, so some of them must start adding new workers. But they’re proceeding very carefully.

“Businesses are still pretty cautious about hiring,” he says. “They’re hiring where they have to.”

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