US jobs market not hit by government shutdownFriday 08 November 2013 16.05
US job growth unexpectedly accelerated in October as employers shrugged off a government shutdown, suggesting the budget standoff had a more limited impact on the economy than initially feared.
Employers added 204,000 new jobs to their payrolls last month, the Labor Department said today.
The unemployment rate, however, rose to 7.3% from September's nearly five-year low of 7.2%.
The department said there had been no "discernible" impact on payrolls from the 16-day federal government shutdown, adding that it had received an above average response rate from employers to its survey.
Today's report also showed 60,000 more jobs created in September and August than previously reported, suggesting that the economy had upward momentum heading into the shutdown last month.
Economists polled by Reuters had forecast that payrolls would rise by 125,000 in October and the unemployment rate would move up a tenth of a percentage point to 7.3%.
The better than expected increase in payrolls could raise expectations that the Federal Reserve will curtail its bond-buying programme earlier than most economists were anticipating.
October's job gains pushed them above the 190,000 monthly average for the past 12 months, a sign of strength in the labour market. But there was some bad news as more people dropped out the labour force, pushing the participation rate to 62.8%, the lowest level since March 1978.
The department said the drop in the participation rate was not related to the government shutdown as laid off government workers remained in the labour force.
The smaller survey of households from which the jobless rate is derived showed a 735,000 decline in employment. The Labor Department said the decrease was partly due to federal workers laid off during the government shutdown.
The better than expected payrolls count, however, is unlikely to change expectations of slower economic growth in the fourth quarter, given that consumer spending slackened and business inventories rose in the three months from July to September.
The private sector accounted for all the job gains last month, with a reversal in local government weighing on overall government employment. Government payrolls fell 8,000 last month.
Local governments had seen hefty job gains between August and September, most of them in education - increases economists said were due to difficulties adjusting the data for seasonal fluctuations at the start of the new school year.
The leisure and hospitality industry added 53,000 new jobs, the most since April, while professional and business services added 44,000 new positions. Payrolls in the retail sector increased 44,400 last month.
US manufacturing employment rose 19,000, the most since February. There were also gains in construction, where payrolls rose 11,000.
The average work week held steady at 34.4 hours. Hourly earnings gained two cents and have risen 2.2% over the past 12 months.
US consumer sentiment in shock November dip
US consumer sentiment unexpectedly dipped in November to a near two-year low as lower-income households worried about their job prospects and financial outlooks and negative views of the government lingered.
The Thomson Reuters/University of Michigan's preliminary reading on the overall index of consumer sentiment fell to 72 in November, its lowest since December 2011.
That was lower than both October's final reading of 73.2 and the 74.5 economists had expected this month.
Lower-income households in the US in particular worried about their future financial state. That was a contrast to richer households - those with incomes above $75,000 - which felt more optimistic as stock prices increases boosted net wealth gains.
Nevertheless, consumers largely remained nearly as negative on government policies as they were last month, when a federal government shutdown prompted worries growth would drag.
The government also came close to breaching its borrowing limit, which compounded the crisis and could have pushed the country closer to an historic debt default.
"Following the end of the shutdown, consumers were somewhat more optimistic about the outlook for the economy, but thus far the rebound has been lacklustre," survey director Richard Curtin said in a statement.
The survey's gauge of consumer expectations edged down to 62.3, compared to 62.5 in October and expectations of 64. The index of current conditions slipped to 87.2 from 89.9 last month. Analysts had projected a reading of 90.
The one-year inflation expectation rose to 3.1% from 3%, while the five-to-10-year inflation outlook gained to 2.9% from 2.8%, the survey showed.