The unemployment rate dropped to a five-year low of 4.4 percent in October as employers added 92,000 new jobs — flashing a picture of a strong labor market as the midterm elections draw near.
The latest report, released Friday by the Labor Department, showed that the civilian unemployment rate fell 0.2 percentage point from 4.6 percent in September. It marked the third month in a row that the politically prominent jobless rate declined.
The tally of new jobs added to the economy in October fell short of economists expectations for an increase of around 125,000 positions, however. Nonetheless, job gains in both August and September turned out to be much stronger than previously estimated — and that took much of the sting out of October’s less-than-expected payroll performance.
“The job market is healthy even though the economy has been slowing. This report tells us the economy is holding its own, not spiraling downward,” said Stuart Schweitzer, global market strategist for JPMorgan Asset and Wealth Management.
Friday’s report provided the last snapshot of the nation’s employment scene before next week’s elections.
President Bush was quick to seize upon the figures as evidence that his economic policies are working.
“Tax cuts have led to a strong and growing economy and this morning we got more proof of that,” the president said at Republican rally in Springfield, Mo. Bush also expressed confidence that Republicans would keep control of Congress. Of the Democrats, he said: “ ... now they’re forecasting they’re going to win the election. If their elections forecasts are as good as their economic forecasts, we are going to have a great day on November the seventh.”
How voters view job availability, wage growth and other economic conditions is likely to play a role in the balloting nationwide on Tuesday. Republicans, fighting to retain control of Congress, say Americans are mostly better off, while Democrat rivals disagree, saying low- and middle-income workers are struggling.
President Bush’s approval rating on the economy is at 40 percent, among all adults surveyed in an AP-Ipsos poll. That remains near his lowest ratings. Those surveyed trusted Democrats more than Republicans to handle the economy.
Workers saw solid wages gains last month.
Workers’ average hourly earnings climbed to $16.91 in October, a sizable 0.4 percent increase from September. That increase was bigger than the 0.3 percent rise economists were expecting. Over the last 12 months, wages grew by 3.9 percent.
Growth in wages is good for workers, but a rapid and sustained advance makes economists fret about inflation flaring up. That’s not good for the economy or workers’ pocketbooks, ultimately, because inflation can eat into everybody’s buying power.
The hunt for a job got shorter.
The average time that the unemployed spent in their search for work in October was 16.5 weeks, an improvement from the average 17.4 weeks registered in September.
On the payroll front, job losses in manufacturing, construction and retail offset gains in professional and business services, education and health, government and elsewhere.
Factories shed 39,000 jobs in October, marking the fourth straight month of employment cuts. Construction companies got rid of 26,000 jobs, while retailers trimmed 3,500 positions.
Professional and businesses services, meanwhile, added 43,000 jobs. Education and health expanded employment by 28,000, and the government payroll swelled by 34,000.
All told the 92,000 total net jobs added in October were the fewest in a year, when the economy was suffering the blow of the Gulf Coast hurricanes.
That disappointment, however, was offset by much better job gains in the previous two months. Employers added 148,000 jobs in September, versus the 51,000 first reported. Payrolls grew by a robust 230,000 in August, stronger than the 188,000 slots previously recorded.
The 4.4 percent unemployment rate was the lowest since the spring of 2001.
The jobless rate for blacks fell to 8.6 percent last month, from 9.2 percent in September. The unemployment rate for Hispanics dropped to 4.7 percent, from 5.4 percent. The jobless rate for teenagers declined to 15.4 percent from 16.4 percent.
The drop in the overall unemployment rate surprised economists who were expecting the unemployment rate to hold steady in October or possibly edge up a notch.
The employment gains come against a backdrop of a slowing national economy.
Given these circumstances, the Federal Reserve held interest rates steady last week for the third meeting in a row but made clear that policymakers will keep a close eye out for inflation.
To fend off inflation, the central bank since June 2004 had hoisted rates 17 times, the longest string of increases in Fed history. The Fed’s goal is to slow the economy sufficiently to thwart inflation but not so much as to push it into recession.
Economic growth slowed to a 1.6 percent annual rate in the late summer, the most sluggish pace in more than three years. The housing slump was a major factor in the slowdown. Economists believe growth in the current October-to-December quarter will turn out better.