National jobless rate ticks down to 4.9 percent

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U.S. employers added a decent 161,000 jobs in October and raised pay sharply for many workers. It was the final major report on a lukewarm but durable economy before Americans choose a new president next week.

The Labor Department's monthly employment report Friday fell about 14,000 jobs short of most analyst predictions, but it sketched a picture of a resilient job market. The pace of hiring has been consistent with a decent economy, yet one also pocketed by weaknesses that have left many Americans feeling left behind on the eve of Election Day.

Last month's job growth helped cut the unemployment rate to 4.9 percent from 5 percent. And average hourly pay took a big step up, rising 10 cents an hour, to an average of $25.92. That is 2.8 percent higher than a year ago and is the sharpest 12-month rise in seven years.

Ball State University economist Michael Hicks, director of the Center for Business and Economic Research, said he wasn't impressed with the report.

"The October jobs report is much weaker than recent months, and reflects a sluggish, and maybe faltering recovery," he said in an emailed statement. "The Employment Situation Summary for October 2016 reported 161,000 new jobs, but with a labor force decline of 195,000. The relatively large loss of workers, rather than the growth of jobs, helped push the unemployment rate to 4.9 percent."

Other economists praised the report.

"If you wanted to show that the economy is still getting better for the typical voter, this report gives you what you needed," said Jed Kolko, chief economist with Indeed, the job site.

The pickup in pay follows a substantial increase last year in earnings for the typical household. The economy appears to be finally delivering widespread raises after years of sluggish pay gains. With the unemployment rate near healthy levels, businesses are likely having to try harder to attract workers.

When businesses are forced to offer higher pay, they may raise prices to cover the costs, potentially boosting inflation. That dynamic has helped make it likely that the Federal Reserve will raise interest rates for the first time this year when it meets next month.

"The only remaining obstacle to the Fed hiking in December would be a significant adverse financial market reaction to the US presidential election," Chris Williamson, an economist at IHS Markit, wrote in a research note.

Despite the job gains, the economy is growing at the slowest pace of any in a recovery since World War II. Growth picked up to a 2.9 percent annual rate in the July-September quarter, the government has estimated, much faster than the 1.1 percent pace for the first half of the year. But most analysts foresee only modest expansion in the October-December quarter, leaving growth at an anemic rate of about 1.8 percent for all of 2016.

Hiring in October was led by professional and business services, a category that includes mostly higher-paying jobs in engineering, accounting and information technology. Those added 43,000 jobs, followed by health care firms, which gained 39,100.

One surprise was in the retail sector, which shed 1,100 workers last month, a time when hiring typically ramps up for the winter holidays.

The unemployment rate fell in part because many of those out of work stopped searching for jobs and were no longer counted as unemployed. Their exodus lowered the number of unemployed by 150,000, to 7.8 million, and pushed down the rate. The proportion of Americans who either have a job or are looking for one fell slightly.

“Today’s jobs report does little to change President Obama’s lackluster economic legacy," Indiana Sen. Dan Coats said in a written statement. "Far too many Americans are still looking for work or have given up on seeking a job. The labor force participation rate remains well below historic levels, and the real unemployment rate is closer to 10 percent when factoring in people who have given up looking for work within the last year and those who are underemployed and working part-time jobs."

Consumers — the U.S. economy's primary fuel — are showing some staying power, even though their spending slowed in the July-September period. Consumer spending did rise at a robust pace in September alone.

Much of that spending was on higher-priced items, including cars and homes. Auto sales are running close to last year's record high of more than 17 million. And while home sales have leveled off this year, they have done so at a nearly healthy level of 5.5 million.

Businesses, though, have been cutting their spending on machinery, computers and other equipment. They have reduced such spending for the past four quarters — the longest such stretch since the recession officially ended in mid-2009.

Manufacturers cut 9,000 jobs last month and have shed more than 50,000 in the past year. That slowdown may reflect jitters about the election and uncertainties about the next president's economic policies.

The cutbacks have slowed factory output for the past year. Orders for manufactured goods have dropped 2.3 percent in 2016 compared with last year. That's a big reason factories have shed nearly 50,000 jobs in the past 12 months.

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