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Jobs report arouses new optimism

October data show solid growth and suggest a smoother road for whoever wins the presidency.

November 03, 2012|By Don Lee, Los Angeles Times

depressed activity, home sales and construction are growing — and that is helping consumer confidence, which rose in October to its highest level since late 2007, as measured by the University of Michigan survey of consumers.

The improvements in home sales and building also have boosted hiring. Construction payrolls were up 17,000 last month after smaller gains in the previous four months.

Raymond Gaster, owner of a lumber and hardware business in Savannah, Ga., said he recently hired two workers, a yard man and a driver, and he is looking for more sales people to add before year-end. Gaster expects his company's sales to show a 17% increase this year. He sees the potential to do double that next year.

"Right now, I'm optimistic," he said.

Stocks initially rose after the jobs report but ended down Friday, with the Dow Jones industrial average falling more than 1% and giving up all of the gains from a day earlier.

One reason may be that though employment growth beat analysts' expectations for 125,000 jobs, the monthly data also showed stagnant wages — partly reflecting the fact that many of the new jobs pay low wages — and there was no gain in average employee hours worked, a leading indicator.

A broad swath of service industries saw job gains in October. So did manufacturing payrolls, which rebounded after dropping in the prior two months. If the debt crisis in Europe turns the corner, as some experts see happening, that would give a lift to trade and economic growth. And it would remove a major head wind for American businesses.

U.S. exports and business spending for equipment have been big growth engines since the recovery began in mid-2009 but have weakened in recent months. Companies have pulled back amid uncertainties about future economic and tax policies. But that picture will become clearer after Tuesday.

Dean Baker, an economist at the Center for Economic and Policy Research, sees a good chance that hiring will pick up in the coming months. That's not to say the economy will be creating 300,000 and 400,000 jobs a month, as it did after the deep recessions in the mid-1970s and early 1980s, he said. But with the biggest impediments to faster growth looking like they may ease, there's hope that employment growth will accelerate a bit — at least over the short term.

"We are on a path that definitely looks better," Baker said.

Times staff writer Seema Mehta, reporting from West Allis, Wis., contributed to this report.

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