October Jobless Rate Tops 10%
Posted on November 3rd, 2009
WASHINGTON — U.S. unemployment rose by more than expected in October to hit its highest level in more than 26 years and employers cut more jobs than forecast, a sign the labor market continues to struggle as the economy emerges from its deep recession.
The unemployment rate, calculated using a survey of households as opposed to companies, rose by 0.4 percentage point to 10.2%, the Labor Department said Friday. Economists surveyed by Dow Jones Newswires had forecast an increase to 9.9%.
Nonfarm payrolls fell by 190,000 last month, with the largest job losses in construction, manufacturing, and retail trade. Economists had expected a 175,000 decrease.
Since the start of the recession in December 2007, the number of unemployed has increased by 8.2 million and the unemployment rate has grown by 5.3 percentage points.
The unemployment figures for October strengthen the Federal Reserve’s view that interest rates should remain at record lows to bolster a fragile recovery.
The U.S. central bank Wednesday cited “low rates of resource utilization” as one of the key reasons why it expects its benchmark rate to remain close to zero for an “extended period.” The high jobless rate is a clear indicator of low rates of resource utilization.
In the past, the Fed has started to hike interest rates only several months after the jobless rate peaked.
Though still a terrible loss by historical standards, the payroll data reflects some improvement. Monthly job cuts in January 2009 totaled 741,000, for example.
More recent employment data out Thursday had shown some improvement in the labor market. New claims for unemployment benefits decreased by 20,000 to 512,000 in the week ended Oct. 31, the lowest level since Jan. 3.
The high unemployment numbers come a day after Congress approved an extension of federal jobless benefits for up to another 20 weeks, sending the bill to the White House for President Barack Obama’s signature.
President Barack Obama this week warned that job losses are likely to continue in the weeks ahead.
“We are just not where we need to be yet. We’ve got a long way to go,” Obama told a meeting of the President’s Economic Recovery Advisory Board on Monday.
The U.S. economy expanded in the third quarter for the first time in more than a year, growing an annual 3.5% as the government’s stimulus boosted consumer spending. The productivity of U.S. workers surged over the same period.
However, weakness in the labor market is expected to weigh on the recovery. The usual pattern in economic recoveries is that productivity rises first, then employment follows.
Friday’s report showed that average hourly earnings rose by 0.3%, or $0.05, to $18.72.
Employment in the service sector — the main source of U.S. jobs — fell 61,000 in October. Business and professional services companies shed 18,000 jobs. Retail trade cut 40,000 jobs and leisure and hospitality employment fell by 37,000.
Employment in government was unchanged last month from September.
The average workweek was also unchanged at 33.0 hours in October.
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Tags: October, October Jobless
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