Unemployment Rises Slightly as Job Growth Revs Up

By Toni Vranjes

November 2, 2012

Election Day is just around the corner, and voters have one final jobs report to consider before the big event.

The report, which was released today, shows stronger job growth than many had expected. While economists had forecast a gain of 125,000 new jobs in October, employers actually created 171,000 jobs. Meanwhile, more people entered the labor force last month, pushing the unemployment rate up from 7.8 percent to 7.9 percent.

Job gains were spread among many areas, including professional and business services, retail trade, health care, leisure and hospitality, and construction. However, government employment declined by 13,000.

The Labor Department also revised job growth upward for the previous two months. According to the revised data, the economy added 148,000 jobs in September and 192,000 jobs in August.

In October, the labor force increased by 578,000, and the labor-force participation rate increased from 63.6 percent to 63.8 percent. The growing labor force accounted for the higher unemployment rate, “as more people threw their hats into the ring and started looking for jobs,” Mesirow Financial economist Diane Swonk wrote in a blog post.

She added: “The labor force participation rate, in particular, edged up in response to a greater sense of hope of finding a job. Measures of consumer attitudes have picked up to reach four-year highs in recent weeks, in response to consumers’ perceptions about the job market improving.”

In a commentary, IHS Global Insight economist Nigel Gault wrote that the payroll numbers revealed “a brighter picture of the labor market, both in faster headline job creation and in upward revisions to previous months.” He also saw good news in both construction and retail employment, “consistent with the better news coming in from the housing market and with an improving consumer mood.”

As the presidential candidates tout their competing visions for job growth, how will the latest report affect the race? According to Gault, each of them can find a theme to hammer home.

“Politically there was something for both presidential candidates to grab onto,” Gault wrote. “President Obama can point to faster job creation, while Governor Romney can say that the unemployment rate is higher now than in January 2009 when the president took office. On balance the report is better than expected, which should help the incumbent, but not sufficiently so to be a game-changer.”

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