Washington Post

WASHINGTON POST
WASHINGTON -- U.S. job growth surged in October as builders, temporary agencies and other employers boosted their payrolls, in part to repair widespread hurricane damage in the Southeast, the government reported Friday.
Employers added 337,000 nonfarm payroll jobs last month, the biggest jump since March, according to the Labor Department, which also increased by 113,000 its estimates of the totals for August and September.
The unemployment rate rose slightly, to 5.5 percent last month from 5.4 percent in September, because the number of people looking for work rose faster than the number of jobs.
Even with some gains attributed to the post-hurricane reconstruction efforts, economists said the report showed job growth was spread broadly across many industries. The labor market's strength surprised many analysts who had expected businesses to put hiring plans on hold because of uncertainty over oil prices, which rose above $55 a barrel in October.
The jobs report "tells us the economy did fairly well in October ... despite the run-up in energy prices," said Stuart Hoffman, chief economist for PNC Financial Services Group Inc. Moreover, he said, the growth in employment and wages "gives consumers some spending power to absorb the higher cost of energy and still have a pretty good holiday period."
Looking ahead
However, some analysts cautioned that the pace of hiring is likely to slow after the initial hurricane effects fade.
"While we are encouraged by this latest spurt, we seriously question its sustainability," said Richard Yamarone, director of economic research at Argus Research Co. "Businesses are making do with their existing work forces and really don't need the added expense of labor, especially amid soaring energy and raw materials prices. Many businesses have decided that the skyrocketing cost of health care and medical benefits are simply too much to handle and have decided to eliminate positions."
The figures also cemented financial market expectations that the Federal Reserve will raise a key short-term interest rate at its policy-making meeting Wednesday to keep inflation under control.
After campaign
The Labor figures came out on the heels of a presidential campaign in which jobs ranked among the top issues. President Bush won despite the fact, cited relentlessly by his opponent's campaign, that he was the first president since Herbert Hoover to face the voters on Election Day with fewer jobs on the nation's payrolls than when he took office.
Employers have added jobs for 14 months in a row, for a combined total of 2.2 million since August last year. But by the end of last month, the nation had 371,000 fewer payroll jobs than when Bush was inaugurated in January 2001. If the recent average pace of job growth continues through the end of the year, that deficit would be erased by his second inauguration in January.
The employment figures gave encouragement to many economists who had worried recently that rising energy prices would sharply depress job growth and consumer spending.
"Clearly, uncertainties are diminishing and we are beginning to see some light at the end of the tunnel," said Sung Won Sohn, chief economic officer of Wells Fargo Bank, referring to oil prices and the fears of terrorism that had hung over the country in the months preceding the presidential election.
Many economists had blamed such uncertainties for the sluggish job growth of the summer, which appeared to reflect continued business cautiousness despite healthy profits and cash flow.
The employment report shows the economy "is doing a little better than we thought," said James Glassman, senior economist at J.P. Morgan Securities Inc.