Jobs Report Shows Unemployment Rate Ticked Up to 7.3 Percent; 204,000 Jobs Added

PHOTO: In this Oct. 23, 2013 file photo, Luis Mendez, left, and Maurice Mike,wait in line at a job fair held by the Miami Marlins, at Marlins Park in Miami.
Share
Copy

The Labor Department released October's jobs report showing an unemployment rate that ticked up to 7.3 percent even as employers added 204,000 jobs, more than expected for the period that included a partial shutdown of the federal government.

Economists surveyed by Bloomberg expected about 120,000 jobs added and an unemployment rate of 7.3 percent.

The labor force participation rate, or the percentage of those in the labor force compared to people willing and able to work, fell by 0.4 percentage points to 62.8 percent, a 35-year low. While some economists expected a shorter workweek in part due to the shutdown, which lasted more than two weeks, the average workweek for all workers was unchanged last month at 34.4 hours.

Some of the biggest labor increases were in the leisure and hospitality sector, with 53,000 new jobs, especially new jobs at restaurants: 29,300 jobs. Another sector that saw big job gains was professional and business services with an increase of 44,000 jobs.

The jobs report will be scrutinized closely by investors and economists to see how the government shutdown impacted the labor market. The shutdown was expected to affect the unemployment rate, which is based on a separate survey of households. Furloughed workers are counted as "unemployed" if they are out of work an entire week.

"I think the market is quite surprised by this number," JJ Kinahan, chief derivatives strategist of TD Ameritrade, said of the number of jobs added.

But the report may not be a complete picture of the labor market, in part due to the thousands of federal workers who were on furlough during the payroll period upon which the jobs numbers are based.

The shutdown increased the number of workers who said they were on temporary layoff by about 500,000, which likely includes non-essential government employees and government contractors, Stephen Bronars, senior economist with Welch Consulting, said. There was also a jump in the number of people reporting that they became unemployed in the past five weeks.

On Thursday, the Labor Department said the number of people filing jobless claims returned to pre-recession levels, dropping by 9,000 to 336,000, seasonally adjusted last week.

September's jobs report, released just over three weeks ago due to delays from the government shutdown, showed employers added 148,000 jobs, with the unemployment rate at 7.2 percent. Today, the Labor Department revised September's figure slightly higher to 163,000. The number of jobs added in August was also revised up to 238,000 from 193,000.

In Photos: Twitters Biggest IPO Money Winners

Bronars anticipated that the unemployment rate could continue to fall, "but largely for the wrong reason."

"As people continue to leave the labor force, rather than remain unemployed, the labor force participation rate is the lowest it's been in 35 years," Bronars said. "Some of this is due to the aging of the population, but participation should be increasing during a recovery as more people find work."

The U.S. economy showed better-than-expected growth from July through September, before the government shutdown. On Thursday, the Commerce Department reported growth accelerated to a 2.8 percent annual rate in the third quarter, up from 2.5 percent in the previous three months.

Read More: Surprising Growth in US Economy in Q3

Boston College economics professor Robert Murphy said the Federal Reserve is likely to hold off its tapering of bond purchases until next year, given that the first "clean" employment report won't be available until early January, with the December numbers.

"November's report, due out in early December, will contain some 'bounce back' from the shutdown that will continue to cloud the Fed's interpretation of the state of the labor market, putting the Fed on hold at its next meeting in mid-December," Murphy said.

Join the Discussion
You are using an outdated version of Internet Explorer. Please click here to upgrade your browser in order to comment.
blog comments powered by Disqus
 
You Might Also Like...
See It, Share It
PHOTO: Jodie Foster and Alexandra Hedison attend the Wallis Annenberg Center for the Performing Arts Inaugural Gala presented by Salvatore Ferragamo at the Wallis Annenberg Center for the Performing Arts, Oct. 17, 2013, in Beverly Hills, Calif.
Stefanie Keenan/Wallis Annenberg Center for the Performing Arts/Getty Images for Wallis Annenber