Employers nationwide hired fewer workers in October but the jobless rate fell to a six-month low and job gains in the prior two months were stronger than previously thought, pointing to some improvement in the still-weak labor market.
Nonfarm payrolls rose 80,000 last month, the Labor Department said on Friday, missing economists’ expectations for a gain of 95,000.
However, August and September were revised to show 102,000 more jobs than previously reported. In addition, the small drop in the jobless rate from 9.1 percent came even as more people entered the labor force.
"It’s not a game-changer, but when you take into account the upward revision to prior months and the drop in the unemployment rate, it’s a step in the right direction," said John Canally, an economist at LPL Financial in New York.
U.S. stocks opened lower, as traders kept a wary eye on efforts to tame Europe’s debt crisis, while Treasury debt prices initially fell but then erased losses. The dollar also fell briefly against the euro, but then resumed earlier gains on unease over Europe.
The labor market remains the Achilles heel of the economic recovery, and progress at putting the 13.9 million unemployed Americans back to work remains painfully slow.
The slight improvements in the labor market hinted at by Friday’s report will likely do little to take the pressure off President Barack Obama, who faces a tough fight for re-election next year.
However, they may be enough to keep the Federal Reserve on the sidelines as it considers whether the economy could benefit from a further quantitative easing of monetary policy.
"The latest data is strong enough that it will kill off thoughts of a QE3 Christmas present for global markets," said Alan Ruskin, global head of G10 foreign exchange strategy at Deutsche Bank in New York.
The U.S. central bank on Wednesday lowered its growth forecasts, raised projections for unemployment, and said it was considering additional mortgage debt purchases.
While the recovery appears to be gathering strength, Europe’s debt crisis could still put it off the rails.
While the economy is now in its second year of recovery, only a fraction of the more than 8 million jobs lost during the recession have been recovered.
The economy needs to expand at an annual rate of at least 2.5 percent over a sustained period and consistently add roughly 125,000 jobs to keep unemployment from rising.
The Obama administration has struggled to come up with policies to generate sufficient employment amid stiff opposition from Republicans over more spending.
Fed Chairman Ben Bernanke took lawmakers to task on Wednesday. "It would be helpful if we could get assistance from some other parts of the government to work with us to help create more jobs," he said after a two-day Fed meeting.
There are signs of progress. A broad measure of unemployment that includes people who want to work but have given up looking for jobs and those working only part time for economic reasons fell last month, after scaling a nine-month high in September.
The average duration of unemployment retreated from a record high of 40.5 weeks hit in September.
Last month, private employers added 104,000 workers, offsetting a drop in government payrolls of 24,000. Public employment has fallen nearly every month this year as state and local governments grapple with budget constraints.
In the private sector, job gains last month were almost across the board, though construction fell 10,000 after a surprise addition of 29,000 jobs in September.
Manufacturing payrolls rose 5,000 after a slight decline in September. In the service sector, retail employment rose 17,800, adding to the prior month’s gains.
There were also gains in professional and business services, and temporary employment, which rose 15,000. Economists often look to temporary hiring as a harbinger of increased permanent employment.
Hiring in the health care and social assistance sector, which has been boosted by the swelling ranks of retirees, rose 16,300. However, the gain was less than the prior months.
The average workweek was steady at 34.3 hours and hourly earnings rose 5 cents.
