The October jobs figures released Friday by the BLS showed a stronger U.S. labor market. The unemployment rate edged up by 0.08 percentage points, just enough to raise the headline rate from 7.8 to 7.9 percent. However, a look at the underlying data showed that the uptick in the headline rate was a "good" increase of the kind that we often see as previously discouraged workers return to a strengthening labor market.
The labor force increased by 578,000 workers in October. The number of employed persons, as measured by the household survey from which these data come, increased by 410,000. Since the increase in new jobholders was less than the increase in the labor force, the number of unemployed increased by a reported 170,000. (The numbers don't sum because of rounding errors.) The unemployment rate is the ratio of employed persons to the labor force.
The BLS also publishes a broader measure of unemployment known as U-6. It includes discouraged workers who have given up looking because they think there are no jobs to be found, people who are working part-time but would prefer full-time work if available, and some other marginally attached workers. The number of involuntary part-time workers fell by 296,000 in October, helping to bring U-6 down from 14.7 percent to 14.6 percent.
Looking at other data from the household survey, we find that the employment-population ratio increased from 58.7 to 58.8 percent. That marks its highest level in more than three years. The labor force participation rate increased as well, from 63.6 percent to 63.8 percent. Both of these data points are further signs of a strengthening labor market.
Turning to the establishment survey, we find more evidence that the labor market has strengthened since mid-summer. The BLS reported 171,000 new nonfarm payroll jobs for October. (The number of payroll jobs added in the payroll survey differs from the increase in the number of employed reported in the household survey partly because the latter includes farm workers and self-employed persons, and partly due to differences in methodology.) More impressive still, the data for previous months were revised strongly upward. The August figure, first reported at 96,000, is revised to 192,000. Similarly, the September figure, first reported at 114,000, is revised to 148,000.
These data are consistent with the increase in GDP growth from 1.3 percent in Q2 to 2.0 percent in Q3, as reported a few days ago by the Bureau of Economic Analysis. In all of Q2, the U.S. economy added just 200,000 new payroll jobs an average of 67,000 per month. Since that time, it has added 692,000 jobs, or 173,000 per month.
Most of October's new jobs were in the service sector. Construction gained 17,000, its third monthly increase. Manufacturing added just 13,000 jobs, not enough to claw back losses in the previous two months. The loss in manufacturing jobs is consistent with the decrease in exports reported in the Q3 GDP data. The private sector added 184,000 jobs in the month, while government at all levels lost 13,000.
Political analysts have traditionally held that data coming so close before an election have little effect on voters. That is likely to be even more true this year, given the steady increase in early voting. Still, this strong jobs report will come as a last-minute morale booster for the Obama team as they go into the last days of their get-out-the vote drive.