Concern for economy focuses on energy prices
By Bill Sing
Los Angeles Times
The U.S. job market rebounded last month from hurricane-related losses, although the payroll gain was far below expectations as high energy prices might have dampened hiring in regions not directly hit by the storms, the government reported yesterday.
U.S. employers added a net 56,000 jobs in October, the Labor Department said. That fell well short of the 100,000 gain predicted by economists and the 196,000 average monthly increase from January to August.
Adding to the disappointment, a Labor Department official said not all the subpar data could be blamed on the effects of hurricanes Katrina and Rita in the Gulf Coast.
"Job growth in the remainder of the country appeared to be below trend in October," said Kathleen Utgoff, commissioner of the Bureau of Labor Statistics. She pointed to the nationwide effects of the hurricanes on energy prices.
The latest report renewed concerns about whether high energy prices coming on top of steep benefit costs and intense global competition were eroding employers' willingness to hire aggressively even in an economy growing at an above-average pace. A subpar job market could in turn curb consumer spending during the holiday shopping season.
Many analysts said the job market and economy were in much better shape than the latest report suggested.
And workers could take heart in a surprisingly strong 0.5 percent increase in average hourly earnings, up 8 cents to $16.27 the biggest monthly gain since February 2003.
"Labor will start demanding bigger pay increases and will get them," said Mark Zandi, chief economist at the research company Economy.com in West Chester, Pa.
Also on the positive side, the unemployment rate fell to 5 percent from 5.1 percent in September. And employment in September was revised upward by 27,000 jobs, putting that month's net loss at 8,000 positions suggesting that the effects of the hurricanes on employment weren't as bad as feared.
But pre-storm job gains were not as robust. Employers added a net 148,000 positions in August, 63,000 less than estimated.
Advances in worker output, reflected in an unexpectedly large 4.1 percent rise in productivity in the third quarter, suggest that many businesses are squeezing more work out of their employees.
Hiring in many private-sector industries was anemic in October, with leisure and hospitality losing a net 18,000 jobs and retail trade down 5,000 positions.
The hurricanes might have created a wait-and-see attitude among employers across the country, causing them to delay hiring, economist Zandi said. "But the underlying job market is sturdy and that will shine through early next year," he said.