The U.S. economy may be sturdier than many analysts had assumed.
Employers added a surprisingly strong 204,000 jobs in October despite the 16-day government shutdown, the Labor Department said Friday, well above even the most optimistic estimates on Wall Street. In addition to the healthier-than-expected number for job creation last month, the Labor Department also revised upward the number of hires in August and September by 60,000.
Not only that, but activity at service companies and factories accelerated last month.
The unemployment rate, based on a separate survey and one that counted furloughed federal employees as out of work, rose to 7.3 percent in October from 7.2 percent in September.
“It’s amazing how resilient the economy has been in the face of numerous shocks,” said Joe LaVorgna, chief U.S. economist at Deutsche Bank.
Analysts even say the economy might be able to sustain its improvement.
They note that job gains of recent months, combined with modest increases in pay, could encourage more spending in coming months. Growing demand for homes should support construction. Auto sales are likely to stay strong because many Americans are buying cars after putting off big purchases since the recession struck nearly six years ago.
And with the nationwide average for gasoline at $3.21 — the lowest since December 2011 — consumers have a little more money to spend.
The report by the Labor Department on Friday had been delayed by a week because of the shutdown last month, and there had been an unusual degree of uncertainty among economists about how the data would shake out.
The combination of faster job growth in October and the sizable upward revisions for previous months strengthens the possibility that the Federal Reserve will act sooner rather than later to ease efforts to stimulate the economy. The Fed has been buying bonds to keep long-term interest rates low and encourage borrowing and spending.
The central bank had initially been expected to scale back its $85 billion a month in purchases of Treasury securities and mortgage-backed bonds in September.
But the Fed and its chairman, Ben S. Bernanke, surprised Wall Street by holding off on the tapering process in light of mixed economic signals over the summer and lackluster job creation.
In the wake of Friday’s report, some experts said the Fed was more likely to announce that it intended to taper when policymakers next meet in mid-December, especially if the jobs report for November is similarly robust.
“The Fed now has one more payroll report before its December meeting,” Ian Shepherdson, chief economist at Pantheon Macroeconomics, said in a note to clients Friday. “Clearly, another report like this one will greatly increase the odds of tapering at that meeting.”
Economists differed over how the robust jobs report might influence the Fed. Some said it probably isn’t sufficient for the Fed to slow its bond-buying program.
“The one month of job growth is not enough to allow them to pull the trigger,” said Patrick O’Keefe, director of economic research at CohnReznick.
But Paul Ashworth, chief U.S. economist at Capital Economics, disagreed, writing in a research note: “In our opinion, the data would justify the Fed reducing the pace of its asset purchases in December.”
The report showed that employers added an average of 202,000 jobs a month from August through October — up sharply from an average of 146,000 from May through July. And they added 45,000 more jobs in August and 15,000 more in September than the government previously estimated.
Private businesses added 212,000 jobs last month. That was the most since February. By contrast, federal government jobs fell by 12,000.
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