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U.S. economy added 80,000 jobs in October, fewer than expected

November 4, 2011 |  8:07 am

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The nation’s economy continued to grow sluggishly in October, adding just 80,000 jobs as concerns about the future weighed on employers and consumers, curtailing both hiring and spending.

The unemployment rate dipped slightly, to 9.0% from 9.1% the month before, and the government revised upwards employment figures from both August and September. But the economy still isn’t creating the 125,000 jobs a month economists say are needed to bring down the unemployment rate.

“Employers are riding a turtle when we were hoping they’d get on a Thoroughbred,” said Patrick O’Keefe, a former assistant secretary at the Department of Labor who is now director of economic research at accounting firm J.H. Cohn.

The service sector led growth in the month, continuing the nation's shift to a service-heavy economy. Retail trade grew by 17,800 jobs and transportation and warehousing added 9,400. Professional and business services gained 32,000 positions and educational and health services added 28,000.

After a burst of activity earlier this year, manufacturing seems to be losing steam. That sector gained just 5,000 jobs in October, and a separate report released earlier this week by Automatic Data Processing Inc. said that the manufacturing industry shed 8,000 jobs last month.

Government and construction are also struggling. Cuts in state positions dragged down the government sector, which lost 24,000 jobs. Construction shed 20,000 positions.

Employers are worried about financial turmoil in Europe and signs that the Chinese economy may be slowing. A potential deal to rescue the Greek economy was threatened this week by debate on whether the country could hold a referendum to accept or reject the deal.

“The uncertainty derived from circumstances around the globe is one of the factors inhibiting private-sector job growth,” O’Keefe said.

The slow pace of growth raises concerns about the nearly 14 million unemployed Americans who could be cut off from unemployment benefits by the end of this year. One-third of the 6 million people receiving unemployment insurance will be cut off from benefits in January unless Congress votes to extend them, according to the National Employment Law Project.

Patricia Harker has already been cut off. Harker, 51, lives in Pontiac, Mich., and says cutbacks in her state have cost her government assistance. She’s applied for jobs at a nearby GM plant and at local retail stores such as Rite Aid, but hasn’t gotten a call back.

“There’s no work in Michigan,” she said. “My lights were shut off today, I’m about to lose my house, every day it’s something.”

Still, there were some encouraging signs in Friday’s report.

The government uses two separate surveys to calculate the employment rate and the number of jobs in the economy in a given month. One, taken by asking businesses how many employees are on their payrolls, showed that the economy grew by just 80,000 jobs. But another, in which individual households are asked about the employment status of their occupants, showed that 277,000 more people were employed in October than the month before.

That could indicate that small businesses are playing a big role in this recovery, said Ryan Sweet, a senior economist at Moody’s Analytics, because they may not be counted in the payroll survey.

In addition, companies are asking their employees to work more hours, a sign that production could be ticking up. The manufacturing workweek rose by 0.2 hours to 40.5 hours, the Bureau of Labor Statistics said, and the average workweek for production employees on all private payrolls grew 0.1 hours.

Earnings ticked up as well, growing by 5 cents, or 0.2%, to $23.19. Average hourly earnings have grown 1.8% over the year.

“Going forward, the labor market isn’t booming, but I don’t think there are any signs we’re going to take a sizable step back,” Sweet said. 

Karim Webb is opening a new restaurant in Rancho Cucamonga later this month. He said that his family, which owns 14 McDonald’s franchises and two other restaurants, is seeing brisk business. Though he received 3,000 applications for the 120 positions being created in the restaurant, called Ra Pour, he said he’s still optimistic about the future of the economy.

“People in general are less fearful,” he said. “They have seen that it’s been several years since the real estate crash, and they’re still living and figure they’re going to make it, so they’re willing to spend a few dollars.”

 

RELATED:

Gyrations on policy leave Greeks dizzy

Private employers add 110,000 jobs in October

Jobless rate dips, but payrolls grow slower than hoped

-- Alana Semuels

Photo: Protesters in Washington, D.C. Credit: Jewel Samad / AFP/Getty Images

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