Jobs report stronger than expected

Lowest October rate since 2007 could signal good holiday season.

Friday’s national jobs report was an unexpectedly strong one — the strongest October result since 2007.

The economy added 271,000 jobs last month, well above the consensus forecast for the month of 182,000 new jobs.

Ken Mayland, president of Cleveland-based ClearView Economics LLC, said the report is positive.

“Obviously, it was a good report,” Mayland said. “A 271,000 (jobs) increase is just a jim-dandy monthly increase. It’s also good because it was substantially above expectations.”

Mayland also thinks retailers are thinking about the Christmas shopping season and are ramping up hiring.

“It think it will be a decent holiday selling season,” he added, especially if gas prices remain low.

The October unemployment rate was basically unchanged at 5 percent. That’s the level considered by some economists to be “full employment.”

The number of unemployed, 7.9 million people, remained basically unchanged, according to a monthly report from the U.S. Bureau of Labor Statistics.

The last time the national unemployment rate for October was anywhere near this low was 2007, when it was 4.7 percent.

Over the past year, the unemployment rate and the number of unemployed people fell by 0.7 percent.

The number of long-term unemployed (those without a job for 27 weeks or more) was essentially unchanged at 2.1 million in October and really hasn’t moved much since June.

The so-called U-6 measure, a ranking of people who aren’t working or looking for work and people who want a full-time job but can only find a part-time position, dropped to 9.8 percent, the lowest since May 2008.

The monthly report is likely to be a key ingredient in the Federal Reserve’s decision-making in mid-December on whether to raise interest rates, Mayland said.

One factor at work, Mayland believes: Retailers are in the midst of an inventory correction. Inventories were running too high relative to sales earlier in the year, especially in the third quarter. That sent a signal to slow down ordering and production, he said, a slowdown that had been apparent in third quarter gross domestic product figures.

Manufacturing employment (12,317,000 jobs) was unchanged for October, Mayland noted. So he sees some of that inventory correction spilling over to the fourth quarter of this year. An increase in jobs of this magnitude means the consumption side of the economy in the fourth quarter “is going to do just fine,” he said.

As long as that happens, producers and manufacturers will “step up,” he said.

Fourth quarter GDP could see 2.5 percent growth or close to it, he said.

“October’s employment report was much improved from the very worrisome data of August and September,” Michael Hicks, director of Ball State’s Center for Business and Economic Research, said in an email. “Good news accompanied total employment growth decline in part-time employment and modestly growing wages.”

The surge in hiring increased hourly wages 9 cents to an average of $25.20, the report said.

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