Businesses hired a burst of workers in October to handle new orders, especially in the service sector. Net job growth of 151,000 last month shows an economy finally shifting from recovery to expansion. Revisions to job losses in August and September provide more good news: The Labor Department now puts the drop at 42,000 instead of the previously reported 152,000.
Certainly, there's still a long way to go. Heidi Shierholz, an economist with the Economic Policy Institute think tank, notes that as welcome as October's job growth is, at that pace it would take 20 years to lower the unemployment rate from the current 9.6% to 5%, where it stood at the start of the last recession. Economic growth -- at 2% in the third quarter, a bit better than the 1.7% pace in the second quarter -- isn't enough to make a dent in the unemployment rate.
About 1 million jobs will be added this year, and about 1.5 million in 2011. The business cycle has passed the familiar phase where employers can substitute productivity gains for hiring workers. Labor productivity advanced an impressive 6.3% for the year ending with the first quarter. Over time, however, the ability to eke more out of existing labor resources wanes and labor productivity slows. In fact, the economy actually experienced a decline in labor productivity during the second quarter. Output per hour of input fell at a 1.8% annual pace. The third quarter showed a modest increase of 1.9%, and future growth in output will require employers to add workers.
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
But before adding many full-time permanent workers to payrolls, employers want to see evidence that the recovery is on solid footing. A midyear economic soft patch raised doubts about that, but just earlier this week, reports from purchasing managers in both manufacturing and services showed sustained growth in new orders.
Health care once again added jobs -- 24,000 in all. But other sectors chimed in, too, including retail stores, restaurants and temporary help. Even construction posted a small increase.
October marks the ninth straight month of gains in private sector jobs. At the same time, however, fiscal stress is starting to take a toll on state and local governments. They cut 7,000 jobs in October after cutting 73,000 in September. Shrinking tax revenue at the state and local levels likely will keep layoffs rising for several months. In addition, the Labor Department report indicates other areas of weakness. Manufacturing shed 7,000 jobs. And a broader measure of the unemployed that includes part-timers unable to find full-time work remained very high, at 17%.
-
Strategies to Optimize Your Social Security BenefitsTo maximize what you can collect, it’s crucial to know when you can file, how delaying filing affects your checks and the income limit if you’re still working.
-
Don’t Forget to Update Beneficiaries After a Gray DivorceSome states automatically revoke a former spouse as a beneficiary on some accounts. Waivers can be used, too. Best not to leave it up to your state, though.
-
The Robots Are Coming... But Not For a WhileThe Kiplinger Letter There’s excitement in the tech sector over the potential of humanoid robots, but widespread adoption is likely to be years away.
-
Farmers Face Another Tough Year As Costs Continue to Climb: The Kiplinger LetterThe Kiplinger Letter Farm income is expected to decline for a second year, while costs continue to up-end farm profitability.
-
H-1B Work Visa Rules Get a RevampThe Kiplinger Letter H-1B visas allow employers to hire high-skilled foreign workers. Regulators have finalized new rules for this visa program following last fall's proposal.
-
Woes Continue for Banking Sector: The Kiplinger LetterThe Kiplinger Letter Regional bank stocks were hammered recently after news of New York Community Bank’s big fourth-quarter loss.
-
Are College Athletes Employees of Their Schools?: The Kiplinger LetterThe Kiplinger Letter A recent ruling has ramifications for labor relations and the unionization of student athletes.
-
Salton Sea Clean Energy and Lithium Project Gets Approval: The Kiplinger LetterThe Kiplinger Letter California's Salton Sea is due to see the construction of a new lithium extraction and geothermal clean energy power plant.
-
More Woes for Anheuser-Busch as a Strike Looms: The Kiplinger LetterThe Kiplinger Letter Drinkers of Anheuser-Busch beers may want to stock up soon. A looming strike threatens to shutter its U.S. breweries later this month.
-
The Auto Industry Outlook for 2024The Kiplinger Letter Here's what to expect in the auto industry this year. If you’re in the market for a car it won’t be quite as daunting as it was during the pandemic and after.
