US job market dodges blow
Employers add 204,000 new jobs in Oct, shrug off government shutdown
washington — 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 Labour Department said on Friday. The unemployment rate, however rose to 7.3 per cent from September’s nearly five-year low of 7.2 per cent.
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.
The 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 payrolls rising 125,000 in October and the unem- ployment rate ticking up a tenth of a per centage point to 7.3 per cent. Last month’s job gains pushed them above the 190,000 average for the past 12 months. But there was some bad news as more people dropped out the labour force, pushing the participation rate to 62.8 per cent, the lowest level since March 1978.
The department said the drop in the participation rate was not related to the government shutdown as furloughed government workers remained in the labour force. The
Inflation remains low enough to be a concern for... the Federal Reserve
Scott Hoyt
private sector accounted for all the job gains last month, with government payrolls shrinking 8,000. Despite the better-than expected payrolls count, that is unlikely to change expectations of slower economic growth in the fourth quarter, given that consumer spending slackened and business inventories rose in the July-September period.
Consumer spending dips
Meanwhile, US consumer spending rose a tepid 0.2 per cent in September, while personal incomes rose 0.5 per cent, another report from the Commerce Department reported on Friday.
The gains in consumer spending, which accounts for two-thirds of US economic activity, have averaged 0.2 per cent over the past three months.The pace of spending slowed from a 0.3 per cent rise in August, but was in line with analyst estimates.
But personal incomes rose for a second straight month by 0.5 per cent, well above the average estimate of 0.2 per cent. Inflation remained tame amid slack demand in the lackluster economy recovering from the severe 2008-2009 recession. The price index for personal consumption expenditures rose 0.1 per cent in September, half the pace in August. Excluding food and energy, the so-called “core” PCE price index, rose 0.1 per cent for the second month in a row.
On an annual basis, overall consumer prices were up 0.9 per cent and core prices gained 1.2 per cent, well below the Federal Reserve’s two per cent target for price stability.
“Inflation remains low enough to be a concern for at least some at the Federal Reserve,” said Scott Hoyt at Moody’s Analytics.