Jobs growth shows some zip; unemployment rate unmoved
The economy created more jobs than expected – 151,000 – in October, the best showing since May. Jobs are being added in many sectors, including health care, retail, and temp agencies. The unemployment rate, though, still stands at 9.6 percent.
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The economy created 151,000 jobs in October, the best performance since May, when the US government beefed up its ranks to take the 2010 Census, the Department of Labor reported Friday. Although the economy created more jobs, the unemployment rate remained unchanged at 9.6 percent, still quite high.
So, where are the new jobs?
Many are in the service sector, especially health care and retail establishments. Hiring from temp services is also relatively strong. And, economists say, there are signs that medium to small businesses are beginning to add to their payrolls.
Some of the segments in the economy that are hiring include:
• The health-care industry. In October, clinics, hospitals, and other health-care providers added 24,000 jobs. In fact, throughout the recession, the health-care business has continued to expand, without a down month since July 1999, notes John Canally, chief economist at LPL Financial in Boston.
“That is basically a testament to demographics: Every month more people enter assisted living facilities and nursing homes,” says Mr. Canally. “An older population needs more care.”
• Retailers. In October, the Labor Department reported, 28,000 people got jobs at retail establishments. In addition, restaurants and food service companies added 24,000 jobs.
“Not that long ago, you could go in a store and walk forever and not find a worker,” says Mr. Naroff. “Business owners saw no reason for an additional employee, so to some extent retailers are understaffed.”
Some business owners say they are on the verge of even more hiring. One is Don Day, who owns eight retail establishments in McKinney, Texas, a suburb of Dallas. “We’re not laying off any more,” says Mr. Day, whose portfolio of stores includes women’s dress stores, a furniture department store, restaurants, and a hotel.
“Retail sales are up, and that sets the stage for us to expand into the next cycle,” he says. “Obviously, as business increases and traffic increases you need more people to service the customers. The trigger for us will be to see a sustained quarter or two of upsurge in business and to see the banks willing to make loans.”
• Demand for temp workers. The temp workforce grew by a healthy 35,000 in October. “The pace of growth is the fastest we have ever seen,” says Bill Grubbs, chief operating officer of SFN Group, a temp company based in Fort Lauderdale, Fla.
SFN, he says, is experiencing “robust demand” for professionals in IT, finance, and accounting. But it is also now getting requests for temp workers for light industrial companies and for clerical workers.
Despite the strong demand, Mr. Grubbs says business could still get better. During strong economic times, temps have accounted for up to 2 percent of the total workforce. They are now at 1.6 percent. “There is still some growth to be had,” he says.
• Mining. The mining sector is growing, adding 8,000 jobs in October. This is partly because of higher energy prices and the lifting of the offshore drilling moratorium, says Canally. But it also reflects the weak US dollar, which makes some US raw materials very attractive. “With the weaker dollar, it makes sense to pull everything out of the ground that you can,” he says.
• Small and medium-size businesses. These companies may finally be starting to hire anew. The evidence? In the October jobs report, the government revised upward the number of jobs that had been added to the economy in previous months, says Naroff. “It takes [small and medium businesses] a longer time to report" their hiring activity, he explains.
Not every sector added jobs last month. Among those that lost workers were manufacturers, which shed 7,000 jobs; the arts, entertainment, and recreation business, which lost 26,000 positions; and local governments, which let go 14,000 workers. But, as Naroff notes, “I think this report shows the underlying economy is stronger than we thought.”