Companies Add 126,000 Jobs in October

Nov. 7, 2003
By LEIGH STROPE, AP Labor Writer

WASHINGTON - The nation's unemployment rate dropped to 6 percent in October as companies added thousands of new jobs for the third straight month, new evidence of an improving labor market.

The Labor Department reported Friday that payrolls grew by 126,000 last month, significantly more than the 50,000 new jobs that economists had predicted. That followed a revised 125,000 new jobs in September, which initially was reported at 57,000.

U.S. companies also added new jobs in August, marking three months of hiring gains following a sixth-month slump. October hiring occurred across a broad swath of the business landscape, including technical services, temporary employment firms, health care, social work, education and retail.

"We can finally put the nail in the coffin of the jobless recovery," said Ken Mayland, president of ClearView Economics. "We are back on a rising job track."

But the hard-hit manufacturing sector continued to shed jobs in October — 24,000 — and it was the 37th consecutive month of declines in that area. The pace of job loss, however, has slowed considerably.

The overall civilian unemployment rate improved from the standstill 6.1 percent level of the last three months.

Federal Reserve Chairman Alan Greenspan struck an optimistic tone about the employment outlook in a Thursday speech to the Securities Industry Association, saying hiring was expected to rebound.

"The odds ... do increasingly favor a revival in job creation," Greenspan said.

The jobs market has been the weak link in the robust recovery, with the economy growing at a sizzling 7.2 percent in the third quarter. Economists now believe the worst days are over, with significant hiring now occurring.

The improvement could benefit President Bush, who will be up for re-election next November. Democrats had hoped to use the lack of new jobs as a political issue to win back the White House, and indeed the election is still a year away.

"The most likely scenario is, we'll get enough jobs so it won't be the issue Democrats need to oust the president," said Mark Zandi, chief economist at Economy.com.

The service sector added 143,000 new jobs last month, the largest increase in nine months. That included a 33,000 gain in temporary employment services, which have added jobs for the last five months.

Economists say that shows companies still remain a bit hesitant about the strength of the recovery and are waiting to take on the increased costs of hiring new workers.

"In the short run, they are hiring temporary workers," Mayland said. "It is creating a pent-up demand for hiring. I think the rebound is sustainable and as we build up a track record," more hiring will follow.

Mayland said the positive employment picture is great news for the holiday season. Consumer confidence should spike, making shoppers more willing to open their wallets. That will help reduce business inventory and lead to new jobs.

Still, the gloom isn't over for all American workers. About 8.8 million remained unemployed last month, with about 2 million without jobs for 27 weeks or more.

Jobs in the airlines industry also continued to decline last month. Since reaching an employment peak in March 2001, the industry has lost more than 20 percent of its jobs.

Hiring in grocery stores got a boost as companies prepared for strikes in Southern California and elsewhere. About 13,000 new jobs were added last month.

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