Economy Added 204k Jobs In October; Unemployment Rate Ticked Up To 7.3 Percent
November 8, 2013
The Washington Post
Ylan Q. Mui
The U.S. economy added 204,000 jobs in October, according to data released Friday morning, defying expectations of a weak labor market in the face of the federal government shutdown.
The Labor Department report showed strong hiring in industries such as retail and hospitality, manufacturing and health care. State governments added 8,000 jobs, but that was offset by declines in federal and local employment.
“This is good news for the economy,” said John Silvia, chief economist for Wells Fargo. “Take it at face value.”
The picture was not entirely rosy, however. The national unemployment rate inched up to 7.3 percent in October. The number of folks who have given up looking for work helped drive the labor force participation rate down to just 62.8 percent.
Silvia said that suggests a growing divide between the employed and the out-of-luck. Skilled workers are enjoying higher demand for their services, while those without jobs are having a harder time reentering the labor force.
“The job market is actually narrowing,” he said. “There’s a smaller group of people working, but they are prospering.”
The data also suggests that the shutdown was not as damaging as many analysts had feared. About 448,000 workers were on furlough during October, according to the report. Many will receive back pay, and some economists suggested that could actually boost spending over the next few months.
Keith Hall, senior research fellow at the Mercatus Center at George Mason University and former director of the Bureau of Labor Statistics, said he expects the shutdown will reduce fourth-quarter economic growth by about half a percentage point. But most of the loss will be made up early next year, he said.
He noted that the last government shutdown in 1995 shaved about half a percentage point from nation’s gross domestic product. But the economy came roaring back the next quarter, nearly doubling its pace of growth.
“There’s almost always some catch-up that goes on,” Hall said. “I’m not sure there’s going to be any real lasting effect.”