American employers added more workers than forecast in October and a rush of people entering the labor force pushed the jobless rate higher, according to the last report on the labor market before next week's presidential election.
Broad-based gains in employment -- from car dealers and hospitals to factories and construction sites -- indicate consumers are likely to spend more freely and shore up the three-year expansion in the face of a global economic slowdown and political gridlock in Washington over taxes and spending.
Hiring increased by 171,000 workers after a 148,000 gain in September that was bigger than first estimated, Labor Department figures showed today in Washington. October's increase exceeded the most optimistic forecast in a Bloomberg survey with a median projection of a 125,000 gain. Unemployment rose to 7.9 percent.
"Jobs are expanding despite all this expression of business caution," said Maury Harris, chief economist at UBS Securities LLC in New York. "You continue to see improvements in people's perceptions of what's happening in the job market."
Private payrolls, which exclude government agencies, climbed by 184,000 last month, the most since February. They were forecast to advance by 123,000.
Stocks fell, erasing early gains, as the payrolls data failed to keep technology and oil producers from slumping. The Standard & Poor's 500 Index declined 0.1 percent to 1,425.92 at 12 p.m. in New York. The yield on the benchmark 10-year Treasury note increased to 1.74 percent from 1.73 percent late yesterday.
Upward Revisions
Revisions added a total of 84,000 jobs to the employment count in the previous two months and brought average gains since June to 173,000.
Government payrolls decreased by 13,000. Retailers took on 36,400 employees, the most since April 2011. Temporary hiring rose by 13,600.
One of those newly employed, Micaela Padilla from Columbus, Ohio, has been at work for about a week after searching since July. To help secure her position at the temporary agency where she works in fund raising for the Leukemia & Lymphoma Society, the 31-year-old took career classes at New Directions, a non- profit career counseling organization in her city.
"Looking for a job was challenging because when you really want to find something that fits you, you have to put in the leg work," said Padilla, who dedicated 15 to 20 hours a week to the search. "It was a lot more involved than I thought it would be. It takes a lot of patience. I feel bad because so many people need a job."
Range of Forecasts
Payrolls forecasts ranged from gains of 30,000 to 154,000 following an initially reported 114,000 increase in September.
The unemployment rate, which rose from 7.8 percent in September, matched the Bloomberg survey median. Estimates ranged from 7.7 percent to 8 percent. The figures were unaffected by Hurricane Sandy because surveys of businesses and households were conducted before the storm struck.
Alan Krueger, chairman of President Barack Obama's Council of Economic Advisers, said in a statement that the jobs figures provide "further evidence that the U.S. economy is continuing to heal from the wounds inflicted by the worst downturn since the Great Depression."
Republican challenger Mitt Romney emphasized that the unemployment rate in October was higher than the 7.8 percent when Obama took office in January 2009, saying in a statement that the report "is a sad reminder that the economy is at a virtual standstill."
Longest Stretch
The jobless rate exceeded 8 percent for 43 months prior to September, the longest such stretch since monthly records began in 1948.
Construction companies added 17,000 workers last month, the most since January. Factories added 13,000 workers after a 14,000 decrease a month earlier.
General Motors Co. (GM) is among manufacturers hiring as the U.S. auto industry makes a comeback after government bailouts during the depths of the financial crisis.
Detroit-based GM, the largest U.S. automaker, has said it will hire about 10,000 workers as part of its plan to bring more work in-house. The new so-called Innovation Center in Warren, Michigan, is one of four facilities planned in the U.S.
Auto Bailouts
The auto bailouts have a central place in a political campaign entering its final days as Obama and Romney contend for votes in battleground states such as Ohio, where one of every eight jobs is tied directly or indirectly to the auto industry, according to a 2010 report by the Center for Automotive Research in Ann Arbor, Michigan.
A University of Cincinnati poll released yesterday in Ohio showed Obama backed by 48 percent of likely voters, while Romney had the support of 46 percent.
Obama leads Romney by six percentage points in Iowa among likely voters and is out front by smaller margins in New Hampshire and Wisconsin, according to a NBC News/Wall Street Journal/Marist College published yesterday. The three states have 20 of the 270 Electoral College votes needed to win the White House.
Nationwide, the most recent polls suggest the race is in a dead heat.
A national ABC News/Washington Post tracking poll put Obama ahead by one point, 49 percent to 48 percent, within the survey's margin of error of plus or minus three percentage points. The poll surveyed 1,293 likely voters from Oct. 28-31. An aggregation of national polls compiled by the website RealClearPolitics also showed a tied race, with each candidate at 47.4 percent.
Obama Term
Ronald Reagan is the only president to have been re-elected since World War II with a jobless rate above 6 percent. The rate was 7.2 percent on Election Day 1984, having dropped almost 3 percentage points in the previous 18 months. Through October this year, the rate has dropped 1.1 points in the same period under Obama.
While employment improved last month, compensation lagged behind. Average hourly earnings climbed 1.6 percent in October from the same time last year, the smallest gain since comparable year-over-year records began in 2007, today's report showed. Earnings for production workers rose 1.1 percent in the 12 months to October, the weakest since records began in 1965.
The gain in payrolls so far this year has averaged 157,000 a month, little changed from the 153,000 average for 2011. Monthly employment gains in 2010 averaged 86,000.
The so-called underemployment rate -- which includes part- time workers who'd prefer a full-time position and people who want work but have given up looking -- decreased to 14.6 percent from 14.7 percent.
Consumer Sentiment
An improving job market has boosted consumer confidence, helping to drive the biggest increase in household spending in seven months in September. Consumer purchases account for 70 percent of the economy.
The Thomson Reuters/University of Michigan consumer sentiment index rose last month to the highest level since before the recession began five years ago. The Conference Board's index reached the highest level since February 2008.
At the same time, the weak global economy and the so-called fiscal cliff -- more than $600 billion of tax increases and budget cuts scheduled to take effect next year unless Congress acts -- have prompted some companies to begin cutting back.
Unless the cliff is averted, "it's going to be a major hit to consumer spending that could knock the economy back into recession," said Stuart Hoffman, chief economist at PNC Financial Services Group Inc. in Pittsburgh. "So we still have that dark cloud hanging over the economy. If that cloud is cleared up a little bit, and I expect it will be, then yes, I think these gains can be sustained."
Warning that they can't combat a slowdown in growth caused by stricter fiscal policy, Federal Reserve officials said Sept. 13 the central bank would hold its target interest rate near zero until at least mid-2015 to stimulate more hiring. The Fed also began a third round of stimulus, buying $40 billion in mortgage bonds a month.
To contact the reporter on this story: Alex Kowalski in Washington at akowalski13@bloomberg.net
To contact the editor responsible for this story: Christopher Wellisz at cwellisz@bloomberg.net
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