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Jobless Rate Dips to 6% as Hiring Surges

Companies add jobs for a third straight month, giving Bush a political lift and indicating the economy is moving toward a full recovery.

November 08, 2003|Peter G. Gosselin | Times Staff Writer

WASHINGTON — Ending more than three years of anemic hiring, employers added 126,000 workers last month in the clearest sign yet that the U.S. economy is on the road to full recovery.

The October jobs-growth number, issued Friday by the Labor Department, was nearly twice what analysts had predicted and helped push the nation's unemployment rate down a tenth of a point to 6%.

The size of the swell in payrolls was especially encouraging because it was accompanied by revisions of previous months' figures to show substantially greater job gains than initially reported. For example, companies expanded their workforces by 35,000 in August, rather than shrinking them by 93,000 as the department originally said.

The economy has now added jobs for three straight months, something it had not managed since mid-2000.

"We're finally seeing the first signs of the long-overdue turnaround in the labor market," said Princeton economist Alan B. Krueger.

Coupled with last week's gross domestic product figures, which showed the economy dashing forward at a feverish 7.2% annual rate from July through September, the employment report was a big political boon for President Bush and raised new difficulties for his Democratic opponents.

The president's economic advisors could barely contain their glee. "We're very happy," said N. Gregory Mankiw, chairman of the White House Council of Economic Advisors.

Bush himself remained more cautious, repeating his oft-stated concern for the unemployed even as he said better times were on their way.

"The economy is growing. New jobs are being created. There's a wonderful, wonderful future ahead for people who may ... think their

Democrats struggled to catch their political balance. The October job numbers "cannot change the fact that, under this president, we will lose jobs for the first time since Herbert Hoover," asserted Democratic presidential contender Sen. John Edwards of North Carolina. In his state, he said, "some 100,000 private-sector jobs have disappeared since President Bush took office."

All of the recent U.S. job growth, and then some, was in the service sector, which added a net 143,000 workers in October and an upwardly revised 138,000 in September. Among the biggest gainers were retail (30,300 net new jobs), education and health services (56,000) and professional and business services (43,000). Temporary help hiring, often considered a harbinger of recovery, rose by a net 17,000.

By contrast, the nation's manufacturers continued to cut payrolls, although at a slower pace. Manufacturing employment fell by 24,000 in October, 28,000 in September and 39,000 in August, according to the Labor Department.

About 8.8 million people were counted as unemployed in October, 6% of the nation's 140-million-plus civilian labor force.

Nearly 2 million of the jobless were African Americans, whose unemployment rate of 11.5% was substantially above the national average. And 1.4 million of the unemployed were Latinos, whose 7.2% rate also was above the average.

Investors greeted the latest job numbers with surprising ambivalence. Stock buyers concluded that the figures suggested the economy was not growing fast enough to justify higher share prices and sent major market measures lower.

The Standard & Poor's 500 index slipped 4.84 points, or 0.5%, to close at 1,053.21. The Dow Jones industrial average dropped 47.18 points, or 0.5%, to 9,809.79. Both benchmarks fell for a third day in four.

Bond traders, however, worried that the numbers indicated the economy might grow too fast and force the Federal Reserve to begin raising interest rates. They reacted by driving bond prices down and pushing yields or market interest rates up.

The yield on the 10-year U.S. Treasury note, which serves as a benchmark for most mortgage and commercial borrowing, rose four-hundredths of a percentage point to 4.44%.

Besides adding workers last month, employers boosted the average workweek of production and non-supervisory employees, who make up the bulk of the nation's workforce, by a tenth of an hour to 33.8 hours. Analysts said that though small, the increase represented a substantial shift from recent years, when firms have generally cut or frozen work hours.

But the benefits of longer hours were at least partially offset as wage growth ground close to a halt last month. Average hourly wages increased just 1 cent between September and October to $15.46, according to the Labor Department. In the year since October 2002, both hourly and weekly wages increased 2.4%. They had been posting year-to-year gains of 3%-plus as recently as this summer.

Analysts said the combination of slowing wage growth and four-decade-low interest rates was behind a substantial jump in consumer borrowing.

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