The unemployment rate rose slightly in October as more Americans moved back into the workforce.
The U.S. economy added 171,000 jobs and the jobless rate edged higher to 7.9% in October, up from 7.8% a month earlier, according to data released Friday by the U.S. Labor Department.
In another hopeful sign that labor markets may be stabilizing, the Labor Department revised upward its August and September job figures, saying 84,000 more jobs were created than initially reported.
“The October payroll survey showed a brighter picture of the labor market, both in faster headline job creation and in upward revisions to previous months. There was good news in both construction and retail employment, consistent with the better news coming in from the housing market and with an improving consumer mood,” said IHS Global Insight Chief US Economist Nigel Gault in a note.
Stock markets fell Friday with all three major indexes down in morning trading.
The numbers arrive just four days before the presidential election pitting incumbent Democratic President Barack Obama against Republican challenger Mitt Romney. Most polls show the race in a dead heat.
Both candidates will undoubtedly attempt to spin the numbers in their favor. Obama will point the surge in people heading back into the labor force as a sign the economy is growing and his policies have slowly but surely started to take hold.
Romney will undoubtedly say the data is encouraging but that the growth remains too slow and, besides, a 7.9% unemployment rate is far too high.
In reality, the numbers don’t decidedly favor one candidate over another.
“Clearly there are more positives than negatives in the October employment report, but we doubt this report will be a game changer for either candidate in the presidential election,” Nomura analysts wrote in a research note.
In any case, the 171,000 jobs added was well above most economists estimates of 125,000 jobs created. For the year, job growth has averaged a monthly 157,000, up slightly from 153,000 in 2011 and about 150,000 since labor markets have started to recover from the financial crisis three years ago, according to the analysts at Nomura.
Job creation has been at the center of the presidential election for more than a year and the focal point of recent fiscal policy. The Federal Reserve Board in September announced its third round of economic stimulus, a program designed to create jobs by giving a jolt to the housing market.
Some analysts said Friday the October report shows those policies are working.
The unemployment rate rose to 7.9% in October, meeting analysts’ expectations. The increase in the rate stemmed from the fact that the size of the workforce rose by 578,000, the second-largest monthly gain in almost 5 years.
That means that more than half a million people who weren't working or even looking for work (and therefore not counted among the unemployed) felt confident enough to go out and try to find a job last month. Meanwhile, the total number of people working in the U.S. rose by 410,000. The difference between the two figures explains the uptick in the unemployment rate.
The labor force participation rate ticked higher to 63.8% in October from 63.6% in September. That's just slightly above a 31-year low of 63.5% in August. The participation rate tracks the percentage of working-age Americans who are employed, plus those who are unemployed but actively looking for work, as a percentage of the civilian labor force.
The Labor Department’s broader U6 unemployment rate fell to 14.6% in October from 14.7% in September. Also known as the underemployment rate, the U6 uses the headline 7.9% figure and adds in frustrated workers who have given up looking for a job plus workers forced to take part-time work because they can’t find a full-time job. Some economists view as a better representation of the "real" U.S. unemployment picture.