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Unemployment dips despite decline in pace of hiring

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The jobs crisis may be easing slightly on the strength of a fourth straight month of modest hiring and a dip in the unemployment rate.

Hiring slowed in October. But the government said job growth was much stronger in August and September than first thought.

Average hourly earnings rose last month. And the unemployment rate ticked down to 9 percent from 9.1 percent, because more people said they found work last month. It was the first drop in the rate since July.

Still, the report suggests that President Barack Obama will likely face voters next year with the highest unemployment rate of any post-war president.

The Labor Department said the economy added 80,000 jobs in October. It was the fewest in four months and below September's revised total of 158,000. The government revised August and September's data to show 102,000 more jobs added.

Even so, October's modest job growth is barely enough to keep pace with population growth. About twice as many are needed to lower the unemployment rate significantly. Many employers are hesitant to step up hiring until they see steady demand from consumers.

Healthier consumer spending was the key reason the economy expanded at an annual pace of 2.5 percent in the July-September quarter, the best quarterly growth in a year. Growth in consumer spending tripled from the spring, despite renewed recession fears and wide fluctuations in the stock market.

But economists worry that the summer spending gains can't be sustained. For one thing, Americans spent more in the third quarter even though they earned less. And they used their savings to make up the difference.

Without more jobs and higher wages, consumers are likely to pare spending in the months ahead. Consumer spending is important because it accounts for 70 percent of economic activity.

The economy generated an average of 130,000 jobs per month in the third quarter, up from 97,000 in the preceding three months. Still, that's down from 166,000 in the first three months of this year.

The biggest change was August. Initially, the government said employers added zero net jobs that month. It has since been revised twice to show 104,000 jobs added.

A raft of data Thursday offered a mixed picture for the economy and hiring.

The number of people applying for unemployment benefits dropped below 400,000 for only the third time this year, the government said. Still, applications would need to fall below 375,000 to signal sustained job gains. They haven't been at that level since February.

Services companies, which employ about 90 percent of the work force, hired more in October after cutting jobs in the previous month, according to a survey by the Institute for Supply Management. Overall growth for the service sector was mostly unchanged from September's slow pace.

Companies ordered more factory goods in September for a third straight month. The gain occurred largely because businesses spent more on industrial machinery, computers and software. It's a sign that in the sluggish economy, many companies are investing in equipment but not in new hires.

Businesses are getting more out their existing work forces while paying less to employ them. Worker productivity rose in the July-September quarter by the most in a year and a half. At the same time, labor costs fell.

Higher productivity is generally a good thing. It can raise standards of living by enabling companies to pay workers more without raising their prices and increasing inflation. But without strong and sustained customer demand, companies are unlikely to hire.

Federal Reserve Chairman Ben Bernanke said Wednesday that growth is likely to be "frustratingly slow," after the Fed sharply lowered its economic projections for the next two years.

The Fed now says the economy will likely expand no more than 1.7 percent for all of 2011. That's down from its June forecast of 2.7 percent to 2.9 percent. And it predicted growth of only 2.5 percent to 2.9 percent next year, nearly a percentage point lower than its June estimate.

The Fed said it doesn't expect the unemployment rate to be any lower this year. And it sees unemployment averaging 8.6 percent by the end of next year.

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  • Larger Story
    There more to the story. The Indiana Department of Workforce development requires employers to pay a certain percent of the first 9K paid to an employee each year. It was the first 7K a couple of years ago. And it was a much lower rate. The feds keep extending the benefits to people on unemployment and it is killing small business. Those rates have been increased greatly over the last two years. Personally, mine has quadrupled. It is now much higher than my mortgage.
    It's odd to think that if I have work for someone today, and not tomorrow, I still have to pay for tomorrow. The unemployment tax should come from employee's with-holdings and not the employers pocket.

    If the DWD quit sending unemployment checks, we would see a lot of people find work rather quickly. It's a no brainer. As long as the IDWD sends non-workers a check, they will take the check. Many of them working for cash on the side until their benefits run out.
    If the DWD required people to do something for the benefits they receive, we would also see a lot of people find work quickly. They should be cleaning our parks or some other task that would be worthwhile and warrant the paycheck they receive.
    The system really needs an overhaul.


    I'm unclear why it's called The Indiana Department of Workforce Development. I do not see them developing any workforce. I see them take money from the working and give it to the non-working.

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  1. These liberals are out of control. They want to drive our economy into the ground and double and triple our electric bills. Sierra Club, stay out of Indy!

  2. These activist liberal judges have gotten out of control. Thankfully we have a sensible supreme court that overturns their absurd rulings!

  3. Maybe they shouldn't be throwing money at the IRL or whatever they call it now. Probably should save that money for actual operations.

  4. For you central Indiana folks that don't know what a good pizza is, Aurelio's will take care of that. There are some good pizza places in central Indiana but nothing like this!!!

  5. I am troubled with this whole string of comments as I am not sure anyone pointed out that many of the "high paying" positions have been eliminated identified by asterisks as of fiscal year 2012. That indicates to me that the hospitals are making responsible yet difficult decisions and eliminating heavy paying positions. To make this more problematic, we have created a society of "entitlement" where individuals believe they should receive free services at no cost to them. I have yet to get a house repair done at no cost nor have I taken my car that is out of warranty for repair for free repair expecting the government to pay for it even though it is the second largest investment one makes in their life besides purchasing a home. Yet, we continue to hear verbal and aggressive abuse from the consumer who expects free services and have to reward them as a result of HCAHPS surveys which we have no influence over as it is 3rd party required by CMS. Peel the onion and get to the root of the problem...you will find that society has created the problem and our current political landscape and not the people who were fortunate to lead healthcare in the right direction before becoming distorted. As a side note, I had a friend sit in an ED in Canada for nearly two days prior to being evaluated and then finally...3 months later got a CT of the head. You pay for what you get...

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