U.S. Labor Department Jobs Report

U.S. Adds 151,000 Private Sector Jobs in Oct.—First Time Jobs Added Since May

Consensus of Analysts’ Predictions Underestimated Gains by 151 Percent

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On Nov. 5, 2010, the U.S. Labor Department reported 151,000 new nonfarm jobs created in October. Most forecasters predicted 60,000 job gains. The increase, however, did not budge the unemployment rate, which remained unchanged at 9.6 percent for the third month in a row.

The Labor Department did a major readjusting of its estimate of job losses in September from 95,000 to 41,000.

Private sector hiring in the services industry powered the turnaround, according to the report. The services sector comprises more than 80 percent of the U.S. economy.

Although the October rate of job growth is encouraging, Heidi Shierholz, PhD, economist for the Economic Policy Institute, points out that at that monthly rate it would take the economy about 20 years to achieve the pre-recession five percent unemployment rates of Dec. 2007!

The private sector added 159,000 jobs, while there was a loss of 8,000 government jobs. Service providers added 154,000 jobs.

The consensus forecast was for 60,000 new private-sector jobs in October. The Labor Department also adjusted its original September estimate of 64,000 private payrolls to 107,000.

"The business sector is joining in the party and it also appears that small to mid-sized firms are adding workers as well," said Joel Naroff, president of Naroff Economic Advisers.

The jobs report suggests a stronger recovery is under way in the private sector than previously expected.

Economists, however, generally believe monthly job growth needs to be in the 200,000 vicinity to effectively start cutting into the unemployment percentages.

"Even though the October job growth is a step in the right direction, given the backlog of 14.8 million unemployed workers in this country, the pace of job growth is not strong enough to bring the unemployment rate down to pre-recession levels anytime soon," says Heidi Shierholz, PhD, economist for the Economic Policy Institute.

Wages and hours worked rose in October, the Labor Department reported. Employees worked an average 34.3 hours a week, up one-tenth point from September.

Average weekly earnings rose to 779.64 dollars from 775.66 dollars.