October 2010 Employment Report

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The U.S. economy added 151,000 nonfarm jobs in October, exceeding most economists’ expectations. Despite the net job gain, the official unemployment rate remained steady at 9.6 percent. So far this year, payrolls have expanded by 874,000 jobs (1 million in the private sector), but that came after the nation lost more than 8 million jobs in 2008 and 2009.
 

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October was the first month this year in which changes in temporary government staffing for the 2010 census played almost no role. About 6,000 enumerators remained on the federal payroll when the employment survey was conducted for October, down from a peak of 586,000 in May.
 

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Other results from the report include:

• Average hourly earnings increased 1.7 percent in October from the same month last year. Earnings rose to $22.73 from $22.68 in the prior month.  
• The average work week for all workers rose to 34.3 hours, from 34.2 hours in September.  
• Government payrolls decreased by 8,000, borne mainly by local governments.  
• The underemployment rate -- which includes part-time workers who would prefer a full-time position and people who want work but have given up looking -- was little changed at 17 percent after 17.1 percent in the prior month.  
• Long-term unemployment increased. The number of people unemployed for 27 weeks or more increased as a percentage of all jobless, to 41.8 percent.  

"This [jobs report] is very optimistic news and it comes in the wake of other fairly good news," Nariman Behravesh chief economist at IHS Inc. in Lexington, Massachusetts. "It looks like [during] the last month or so things have started to move upward again, and the momentum is hopefully building." But, as Stephen Stanley cautioned, "It's just going to take a long time to bring the unemployment rate down to more acceptable levels."

As we have indicated in the past, at least 100,000 jobs need to be created each month just to keep up with population growth. Since nonfarm employment bottomed out last December, job creation has averaged about 87,4000 per month. Thus, the pace of hiring will have to increase dramatically to not only keep up with new workers entering the work force for the first time, but also to once again make those 7+ million still-displaced workers productive.