Job Creation Surpasses Expectations
The U.S. economy gained 204,000 jobs in October, nearly twice what most economists predicted. The unemployment rate figure went up, but that number was distorted because the Labor Department did its sampling during the federal government shutdown.
DON GONYEA, HOST:
This is WEEKEND EDITION from NPR News. I'm Don Gonyea in for Scott Simon. We got some good news for the economy yesterday. The U.S. gained 204,000 jobs in October. That's the latest word from the Labor Department. It was stronger growth than was expected. The unemployment rate rose just a bit from 7.2 to 7.3 percent, though that part of the report was distorted by the government shutdown.
NPR's Chris Arnold reports.
CHRIS ARNOLD, BYLINE: Those 204,000 jobs in October, that was almost twice the number of jobs that economists predicted. The revisions going back two months before that showed a gain of another 60,000 jobs. And so all that's a big deal because job gains had been nosing down in recent months and that wasn't looking very good.
GERALD COHEN: That's exactly right. The job situation looked like it was softening and this suggests that the glide path is one of up rather than down.
ARNOLD: That's Gerald Cohen. He's a former economist with the Federal Reserve who later worked on Wall Street and is now with the Brookings Institution and he finds this latest report encouraging.
COHEN: A much stronger expected report. This shows the resilience of the economy in spite of dysfunction from Washington.
ARNOLD: And that actually put the Obama Administration in a bit of an awkward position. The strong job growth came during the same month that Republicans had shut down the government while democrats were issuing dire warnings about the economic damage of the shutdown. The President spoke yesterday in New Orleans.
PRESIDENT BARACK OBAMA: We added about 200,000 new jobs last month, but there's no question that the shutdown harmed our jobs market. The unemployment rate still ticked up and we don't yet know all the data for this final quarter of the year but it could be down because of what happened in Washington.
ARNOLD: The unemployment rate most likely ticked up a bit because the government shutdown distorted the data. Government workers who were not working temporarily got counted as unemployed. And while some employers must have shrugged off the shutdown, job growth, of course, might have been even stronger if the standoff had been avoided. And even with this latest improvement, the economy is still not in great shape.
IAN SHEPHERDSON: There's no danger, I think, of any sort of imminent return to recession, but equally it's very hard to see any near-term momentum developing to the upside either.
ARNOLD: Ian Shepherdson is chief economist at the forecasting firm, Pantheon Macroeconomics. He says the economy's been clunking along with pretty lackluster growth for years. And this is what he sees as a major problem. Big companies have recovered but smaller companies have not.
SHEPHERDSON: That's been the missing link. So if we look back at the last cycle, small companies generated about two-thirds of all the job growth and the biggest single chunk of that was in start-ups and very small companies that were expanding very rapidly.
ARNOLD: Shepherdson says the younger companies are seen as more risky by banks and investors so they're more vulnerable to blows to confidence, such as debt ceiling standoffs. He says if we could just get a year without any of that, he things more young businesses could start growing again and job growth could pick up a lot more steam. Chris Arnold, NPR News. Transcript provided by NPR, Copyright NPR.View this story on npr.org