US hiring slowed last month, but the unemployment rate hit a six-month low and job gains in the prior two months were stronger than previously thought, pointing to some improvement in the still-weak labor market.
The employment report on Friday was the latest data to suggest the US economy was gathering a bit of momentum and a further indication recession risks were fading.
Non-farm payrolls rose a tepid 80,000 last month, the US Department of Labor data showed, below economists’ expectations for a gain of 95,000 and a slowdown from September.
However, employers added 102,000 more jobs than previously estimated in August and September, and the jobless rate edged down to 9 percent from 9.1 percent, taking the sting out of the report.
“Hiring is not booming, but I don’t think there is any sign of recession. The risk of the economy falling into a second recession over the next six to 12 months has been reduced, but we still have a very long way to go,” said Ryan Sweet, a senior economist at Moody’s Analytics in West Chester, Pennsylvania.
The household survey, from which the unemployment rate is derived, showed strong job gains for a third straight month, more than offsetting an increase in labor force as more Americans resumed the hunt for work.
The labor market remains the Achilles heel of the US recovery and progress putting the 13.9 million unemployed in the US back to work remains painfully slow.
The slight improvements in the labor market hinted at by Friday’s report will likely do little to take the pressure off US President Barack Obama, who faces a tough fight for re-election next year.
However, they might be enough to keep the US Federal Reserve on the sidelines as it considers whether the economy could benefit from a further quantitative easing of monetary policy.
“The labor market data suggest that growth may be strengthening even as Europe may be slipping into recession,” said John Ryding, chief economist at RDQ Economics in New York. “As impatient as the Fed may be, it will be difficult to round up a consensus for QE3 [a third round of quantitative easing] as long as the employment data are pointing to an improving economy.”
The US central bank on Wednesday lowered its growth forecasts, raised projections for unemployment and said it was considering additional mortgage debt purchases. Federal Reserve Chairman Ben Bernanke said officials were eying Europe warily.
Even though the economy is in its second year of recovery, only about a quarter of the more than 8 million jobs lost during the recession have been recovered.
The economy needs to expand at an annual rate of at least 2.5 percent during a sustained period and consistently add roughly 125,000 jobs a month to keep up with new people entering the workforce.
There are signs of progress. A broad measure of unemployment, which includes people who want to work, but have given up looking for jobs, and those working only part time for economic reasons, fell last month after scaling a nine-month high in September.
The average duration of unemployment retreated from a record high of 40.5 weeks hit in September.