Nonfarm payroll gains were larger than expected in October, according to the Bureau of Labor Statistics. They were by 171,000 workers instead of the 125,000 increase anticipated by most economists. It was also an improvement from the 148,000 nonfarm payrolls employees added in September, which was revised from its earlier 114,000 estimate.
At the same time, the unemployment rate rose from 7.8 percent to 7.9 percent. The higher figure – despite improvements in nonfarm payroll numbers – stems from a slight uptick in the participation rate from 63.6 to 63.8. Also, as noted in last month’s release, a large increase in part-time employment was a major factor in the decline in the unemployment rate from 8.1 to 7.8 percent in September. This appears to have modulated somewhat, with part-time workers who are doing so for economic reasons down from 8.6 million to 8.3 million.
Manufacturing employment also improved, with 13,000 net new workers in October. But it is hard to ignore the loss of 13,000 and 14,000 jobs in August and September. Note that the last two month’s data have been revised, as the previous estimates were for 38,000 workers lost in the manufacturing sector. Manufacturers have added 158,000 workers year-to-date or exactly 500,000 since the end of 2009.
Looking at specific sectors, nondurable goods industries fared better than durables, up 8,000 versus 5,000 workers added in the month. Sectors with the strongest gains include food manufacturing (up 2,700), chemicals (up 1,600), computer and electronic products (up 1,600), plastics and rubber products (up 1,600), beverages and tobacco products (up 1,500), nonmetallic mineral products (up 1,400), and transportation equipment (up 1,400).
The transportation sector’s gains stemmed mostly from aerospace, as motor vehicle employment lost 2,100 workers in the month. Other decliners included fabricated metal products (down 1,200), machinery (down 1,100), and miscellaneous manufacturing (down 1,000).
Despite the higher employment numbers, the average hours in the workweek edged slightly lower in the manufacturing sector, down from 40.6 to 40.5. The average amount of overtime was the same at 3.2 hours. Likewise, the average weekly earnings for manufacturing workers declined from $976.43 to $970.79.
Job growth still remains well below its potential and there continues to be larger weaknesses in the economy. The unemployment rate remains elevated, and a drop in the average workweek for manufacturing workers suggests that businesses are yet on a solid footing.
Manufacturers remain quite anxious about slowing global sales and the impending fiscal cliff. The Fiscal Shock study released last week by the NAM shows that Washington’s failure to address the fiscal cliff has already negatively impacted GDP by 0.6 percent this year. Manufacturers are looking to Washington for leadership to address the serious challenges they face so they can grow and create jobs.
Chad Moutray is chief economist, National Association of Manufacturers.