Economy Added 80,000 Jobs in October; Unemployment Falls Slightly

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U.S. businesses kept hiring workers in October even as government payrolls continued to be cut.

The latest report from the Labor Department found that 80,000 jobs were created last month — the fewest in four months.  The private sector was responsible for 104,000 new hires while state and local government reduce their workforce by 24,000.

In a sign that hiring could be stronger than first estimated, the government said an additional 102,000 jobs were created in August and September. 

In a separate report, the department said the unemployment rate fell to 9 percent, a drop of one-tenth of a percent. The rate has hovered between 9 and 9.2 percent since April of this year, and is a reminder that job growth has to rise to higher numbers to make any dent in unemployment. 

“Jobs creation will remain inadequate to keep unemployment from falling in the months ahead,” wrote Peter Morici a business professor at the University of Maryland.

The Federal Reserve this week revised downward its forecast for when unemployment will drop to 8 percent, pushing it off until 2013, a year later than it has projected in June.

"At the current rate it will take more than seven years to bring the number of unemployed down to the pre-recession levels," said Sophia Koropeckyj, managing director at Moody’s Analytics.

Nearly 14 million Americans are unemployed and four of 10 have been out of work for more than six months.  A recent study from the Pew Charitable Trusts found that in the third quarter of this year, nearly a third of the unemployed had been without work for more than a year.  That equals 4.4 million people, close to the population of Louisiana.

“Given the enormous scope of the unemployment problem, this minimal level of job creation will keep us mired in disastrously high unemployment,” said Heidi Shierholz, economist, Economic Policy Institute.

But in an encouraging sign, a broader measure of unemployment that includes people working part-time or who have given up looking for work fell to 16.2 percent from 16.5 percent in September.

Jobs were created in the professional and business services (+32,000), healthcare (+12,000) and leisure and hospitality (+22,000).  Construction jobs, primarily nonresidential, were cut by 20,000. 

The outlook, however, is unclear as Congress debates extending temporary tax cuts set to expire that are meant to spur employers to hire.

“Growth is weak and jobs are in jeopardy, because temporary tax cuts, stimulus spending, large federal deficits, expensive and ineffective business regulations, and increased health care mandates and costs do not address structural problems holding back dynamic growth and jobs creation-the huge trade deficit and dysfunctional energy policies,” said Morici.