WASHINGTON – The U.S. economy may be sturdier than many had assumed.
Employers added a surprisingly strong 204,000 jobs in October despite the 16-day government shutdown, the Labor Department said Friday. And they did a lot more hiring in August and September than previously thought.
Not only that, but activity at service companies and factories accelerated last month.
Unemployment rose to 7.3 percent from 7.2 percent in September. But that was probably because furloughed federal workers were temporarily counted as unemployed.
“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 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.
Job growth is a major factor for the Federal Reserve in deciding when to reduce its economic stimulus. The Fed has been buying bonds to keep long-term interest rates low and encourage borrowing and spending.
The Dow Jones industrial average surged 167 points to close at a record high Friday after the jobs report came out.
But the yield on the 10-year Treasury note climbed to 2.75 percent from 2.60 percent late Thursday, indicating some investors are worried the Fed might pull back on its bond-buying soon.
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.