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Aug 2006 job numbers revised up { November 4 2006 } Original Source Link: (May no longer be active)
http://www.nytimes.com/2006/11/04/business/04job.htmlhttp://www.nytimes.com/2006/11/04/business/04job.html
November 4, 2006
Jobless Rate Hits 5-Year Low
By JEREMY W. PETERS
The labor market for American workers is continuing to improve, the latest government statistics showed yesterday, with job growth advancing in recent months and the unemployment rate falling last month to the lowest level since May 2001.
In a report that eased concerns that economic growth might be faltering, the Labor Department reported yesterday that the jobless rate, seasonally adjusted, dropped in October to 4.4 percent, from 4.6 percent in September.
The government, in its initial estimate, said that employers added a modest 92,000 jobs last month — but it revised the two previous months up so strongly that they outweighed any evidence of weakness. And economists suggested that the new numbers for October may not be any more reliable than the earlier initial estimates and could be revised higher once the Labor Department collects more information.
“What this report says is the job market is still going to be a source of strength for the economy,” said Stuart Hoffman, chief economist with PNC Financial in Pittsburgh. “Concerns about the economy snowballing down the hill and picking up momentum as it heads for a crash landing are just not consistent with this kind of job data.”
As employers added more people to their payrolls, paychecks are starting to improve as well. The average hourly wage gain in October surpassed inflation by the largest amount since early 2002.
Adding to the picture of a strengthening job outlook, the amount of time unemployed Americans spend out of work has shrunk for the third consecutive month.
As a result, economists predicted that the Federal Reserve is likely to keep interest rates steady, with some now arguing that its next move may be up, rather than down.
Coming just four days before the midterm elections, the new job numbers added fuel to the political debate.
The Bush administration quickly trumpeted the low unemployment rate as evidence that its tax cuts have stimulated growth and claimed that a Democratic takeover in Congress could harm the economy.
“Now is the time to make these tax cuts permanent,” said Rob Portman, the White House budget director. “Otherwise, we put all this strong economic growth we’re talking about at risk.”
Democrats pointed to the rather tepid job growth figure from last month as a sign that the economy remains vulnerable. And they said that the tax cuts approved early in the Bush administration have little to do with today’s economic performance.
“Job growth in October was too modest to allay concerns about whether job opportunities will expand in the coming months,” Senator Jack Reed, Democrat of Rhode Island, said in a statement. “Staying the course on the president’s policies has failed to deliver greater prosperity and economic security for most families.”
Labor market conditions are uneven, with the auto industry and housing cutting back, particularly in the Midwestern industrial belt, while government and most other business sectors show strength elsewhere in the country.
In general, though, workers are in their best shape in years. Until recently, wage increases had been trailing inflation. With overall price increases slowing as energy prices fall — general prices are running at roughly 2 percent — the 3.9 percent gain in hourly wages over the last year is beginning to go further.
Hourly wages rose in October by 15 cents, to $16.77, the government said.
With greater tightness in the labor market — beyond the low jobless rate, which only measures those actively in the labor market, the share of the working-age population that is employed also reached its highest point in five years. And economists said that many workers are beginning to enjoy more leverage with their employers.
For their part, employers have been hiring at a more robust pace than first appeared. The government nearly tripled its estimate of job growth in September, to 148,000. It also revised August’s numbers, to 230,000 from 188,000.
But there were some signs of weakness, particularly in private- sector job growth. Government jobs last month accounted for nearly two-thirds of the reported 92,000 added jobs, a sign that some economists say is worrisome.
“We actually had a pretty hefty boost in government jobs,” said Jared Bernstein, an economist with the Economic Policy Institute, a research organization in Washington. “If you want the job machine to be humming, you’ve got to do a lot better in the private sector.”
But Mr. Bernstein agreed that “the job market is relatively strong.”
“Unemployment is low,” he added, “and we’re finally generating wage gains that are likely to beat inflation.”
Compared with the employment boom of the late 1990s, though, job growth remains relatively modest. Moreover, the percentage of the working-age population that is employed, at 63.3 percent, is still below the peak of 64.7 percent, set in April 2000.
The job outlook in housing and manufacturing has dimmed. Home builders are cutting back, eliminating an estimated 26,000 jobs last month. Manufacturers shed 39,000 jobs, led by the shrinking domestic automobile companies.
The government jobs data, which is laid out in two separate surveys each month, provided a typically mixed picture.
The household survey showed that employment growth was strong, while the payroll report, which has been repeatedly revised lately, suggested that it was more modest. They often send opposite signals in a given month, since one is based on hiring records while the other is based on a survey. Factors like self-employment, informal employment and people joining or dropping out of the labor pool can account for some of the differences.
In October, the preliminary estimate of 92,000 new jobs from the business survey compared with an estimate of 437,000 new workers in the household survey.
“The truth is probably somewhere between the two,” said Lynn Reaser, chief United States economist at Bank of America. “But even if that is the case, it would suggest that the labor market is very strong.”
The combination of a taut job market and rising wages will probably keep the Fed from cutting interest rates anytime soon, economists said. If anything, they said, it might raise them next year if the economy picks up steam.
“The Fed can’t possibly think of reducing rates with an unemployment rate that continues to sink,” said Richard Yamarone, director of economic research at Argus Research. “And the Fed can’t truly justify lowering rates in this inflationary environment.”
Jobless Rate Fell in Canada
OTTAWA, Nov. 3 ( Reuters) — A rush of hiring in the western oil fields pushed Canada’s unemployment rate down to 6.2 percent in October, close to a 30-year low.
Economic growth in the oil fields of Alberta helped create a larger-than-expected 50,500 new jobs last month, Statistics Canada said on Friday.
October was the second consecutive month of job gains after a three-month downturn.
“A stunningly strong report,” the chief strategist at TD Securities, Marc Lévesque, said. “Canada’s job market still looks like it is plowing along at a pretty solid clip.”
Some 15,000 factory jobs were lost nationwide, mostly in central Canada’s manufacturing hub. Those losses were offset by more jobs in construction, education, business, building, public administration and other support services, the agency reported.
Copyright 2006 The New York Times Company
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