The Labor Department has just released its October jobs report — the last report before next Tuesday's election. During the month, the U.S. added 171,000 new jobs. That improvement in the hiring picture, something that's been developing over the last three reports, was enough to nudge the headline unemployment rate up to 7.9 percent from 7.8.
As I argued Thursday in my jobs report preview, I thought we'd get a better-than-expected October. The ADP report, a private estimate that comes out before the government numbers, said October had been a plus-158,000 month. The Bloomberg consensus was more conservative, at plus-125,000. I was looking at revision to previous months — August and July were both revised up in the September report, and in today's October report, the Bureau of Labor Statistics (BLS) said that in August, the U.S. actually got close to 200,000 new jobs (192,000), and when August was first reported, that number was 92,000.
That trend continues with Friday's report, as September, which initially came in at 114,000, was revised up to 148,000. Beneath the headlines, the economy is a bit stronger than it looks.
I also had an eye on economic growth in the third quarter. It ran at 2 percent, which isn't very good, but good enough to support jobs growth in the 150,00-200,000 range each month.
Here's the bad news. On average, job gains in the U.S. in 2012 — and it should be noted before we get too gloomy that they're still gains — have been 157,000, according to the BLS. That's just sightly better than 2011, when the figure was 153,000. To put that in context, for the employment situation to return to "normal" in the U.S., recovering to pre-crisis levels, the U.S. needs to add 300-400,000 new jobs each month. Right now, the country is barely keeping pace with new workers entering the workforce.
The labor participation rate moved up very slightly in October. This is number of people who are actually working or trying to work in the economy, and it's at its lowest level since the early 1980s. The modest upward move was likely what pushed the unemployment rate up to 7.8 to 7.9 percent, which in any case isn't a statistically significant change.
What's the California story? Well, if you look at the sectors of the economy that added a decent number of jobs in October, we probably benefitted in three: Professional services, health care, and, believe it or not, construction.
Construction is an interesting wrinkle in this month's report. Construction added 17,000 new jobs, but the gain was mainly in "specialty trade contractors" — a category that encompasses workers who do repairs and remodeling, but who also prepare sites for building. An uptick on this front is consistent with two things: People making improvements to their homes because they plan to stay in them (rather than getting foreclosed) or sell them (because they're no longer underwater on the mortgage); and homebuilers getting ready to build in warm weather regions.
There's a housing inventory shortage in California, and some of those 171,000 new jobs could represent the leading edge of a sustained recovery in both the housing market and the homebuilding industry.