Companies added jobs despite U.S. shutdown

Payrolls grow by 204,000 in October

WASHINGTON — Employers added a surprisingly strong 204,000 jobs in October despite the 16-day partial government shutdown, the Labor Department said Friday. And they did a lot more hiring in August and September than previously thought.

The unemployment rate rose to 7.3 percent from 7.2 percent in September. But that was probably because furloughed federal workers were temporarily counted as unemployed. Arkansas’ unemployment rate was 7.4 percent in August, the most recent data available.

“It’s amazing how resilient the economy has been in the face of numerous shocks,” said Joe LaVorgna, chief U.S. economist at Deutsche Bank.

Analysts say the economy might be able to sustain its improvement. They note that job gains of recent months, combined with modest increases in pay, could encourage more spending in coming months; growing demand for homes should support construction; and auto sales are likely to stay strong because many Americans are buying cars after putting off big purchases since the recession struck nearly six years ago.

And with the nationwide average price for gasoline at $3.211 — the lowest since December 2011 — consumers have a little more money to

spend. In Arkansas, the average price for gasoline on Friday was $2.967 a gallon, down from $3.14 a month ago, according to travel club AAA.

Job growth is a major factor for the Federal Reserve in deciding when to reduce its economic stimulus. The Fed has been buying bonds to keep long-term interest rates low and encourage borrowing and spending.

The Dow Jones industrial average surged 167.80 points to close Friday at 15,761.78, a record high, after the jobs report came out.

But the yield on the 10-year Treasury note climbed to 2.75 percent from 2.60 percent late Thursday, indicating some investors are worried the Fed might pull back on its bond buying soon.

For some employers outside the District of Columbia Beltway, the government shutdown scarcely mattered.

“The government shutdown really didn’t have a material impact on employment,” said Brian Jones, senior U.S. economist at financial-services company Societe Generale in New York. “The labor market is actually quite healthy, regardless of what people may think. The economy is doing better.”

Bob Duncan, founder and chief executive of Dallas-based American Leather, said his company is on track for a third-straight year of steady revenue gains. American Leather custom-builds sofas, recliners and other furniture for Crate and Barrel and many smaller chains.

Duncan has increased his 400-member workforce by about 2 percent in the past three months.

“I think everyone’s kind of numb to it,” Duncan said, referring to the budget battles in Washington.

More important to Duncan has been a spate of remodeling by hotel chains, many of which had postponed upgrades until recently. Sales have risen as a result.

Economists differed over how the robust jobs report might influence the Fed. Some said it probably isn’t sufficient for the Fed to slow its $85 billion-a-month bond-buying program when it meets Dec. 17-18.

“The one month of job growth is not enough to allow them to pull the trigger,” said Patrick O’Keefe, director of economic research at CohnReznick.

But Paul Ashworth, chief U.S. economist at Capital Economics, disagreed, writing in a research note: “In our opinion, the data would justify the Fed reducing the pace of its asset purchases in December.”

The report showed that employers added an average of 202,000 jobs a month from August through October — up sharply from an average of 146,000 from May through July. And they added 45,000 more jobs in August and 15,000 more in September than the government previously estimated.

Private businesses added 212,000 jobs last month. That was the most since February. By contrast, federal government jobs fell by 12,000.

Many retailers are optimistic about consumers’ willingness to spend more during the Christmas shopping season. Wal-Mart said it plans to hire 55,000 seasonal workers, up from 50,000 last year.

Amazon.com Inc., the world’s largest online retailer, is creating more than 70,000 full-time seasonal jobs and expects to convert “thousands” of those positions to permanent roles after the Christmas season ends as it did in 2012, according to a statement.

United Parcel Service Inc., the world’s biggest package shipping company, is hiring 55,000 seasonal employees to handle an expected 8 percent increase in peak season daily volume, according to an Oct. 25 statement. The employees will work as drivers, helpers, package sorters, loaders or unloaders to help with demand during the Christmas shopping season, Atlanta-based UPS said.

One troubling detail in the job report: The percentage of Americans working or looking for work fell to a 35-year low in October.

That figure may have been temporarily worsened by the partial government shutdown. Even so, it suggests many Americans are discouraged about their prospects for finding a job.

Nearly 4.1 million Americans have been out of work for six months or more. The number has tripled since the recession began in December 2007. The long-term unemployed represent more than a third of the 11.3 million people out of work.

About 1.3 million of the long-term jobless will lose their unemployment benefits by year’s end unless Congress renews an emergency benefits program, according to the National Employment Law Project. The emergency program provides up to 37 additional weeks of aid in most states on top of the 26 weeks that states typically dispense.