U.S. job growth nearly stalled last month, the Labor Department reported Friday, suggesting that employers had become more cautious about...
WASHINGTON — U.S. job growth nearly stalled last month, the Labor Department reported Friday, suggesting that employers had become more cautious about hiring because of high energy prices.
The nation’s unemployment rate dipped to 5 percent in October from 5.1 percent in September, and it has averaged 5 percent for the last five months.
Employers added just 56,000 jobs, only about a third of the number needed to keep up with population growth, many economists say. That gain left the total number of payroll jobs “little changed,” said Kathleen Utgoff, commissioner of the department’s Bureau of Labor Statistics.
“The relatively weak increase” was not due to the direct effects of the three powerful hurricanes that struck the Southeast since late August, Utgoff said in a statement. Rather, she said, job growth in the rest of the country appeared to have slowed, possibly because of the surge in energy prices caused by hurricanes Katrina and Rita.
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“The U.S. economy continues to roll along, but the one-two punch of hurricanes and energy costs have definitely made it wobble,” said William Cheney, chief economist of John Hancock Financial Services.
Katrina hit in late August, followed by Rita in late September. Both pummeled the Gulf Coast, damaging oil rigs, refineries and pipelines, sending prices soaring for gasoline, diesel fuel, jet fuel and natural gas. Hurricane Wilma ripped across Florida last month, but it had no effect on the employment report because it hit after the data was collected.
More than 521,000 workers have filed new claims for unemployment-insurance benefits since early September because of job losses directly related to the three storms, the department said Friday.
Job growth was essentially flat in September, largely because of the damage inflicted by Katrina and Rita, which wiped out thousands of workplaces and forced thousands of workers out of their homes. But hiring remained brisk in September outside of the Gulf region, the department said.
Oil and gasoline prices have eased since September but remain high enough to cause many consumers to cut back on other spending and to prompt employers to think twice about hiring more workers.
Auto dealers, department stores, clothing boutiques, hotels, bars and restaurants all cut jobs last month, the department reported, after adjusting for seasonal variations.
The decline in auto-dealership employment mirrored the plunge in vehicle sales last month following a summer of torrid sales.
The job losses in hotels, restaurants and retailing “may simply reflect the tribulations of the tourist industry in the Gulf Coast region, but it may also be a sign of consumers finally reacting to the impact of energy costs on their discretionary spending power,” Cheney said.
Cheney and other analysts agreed that the employment report will not deter the Federal Reserve from raising its benchmark short-term interest rate again at its next meeting Dec. 13 to keep inflation under control.
Price increases have remained tame outside of food and energy items, but Fed officials worry that high energy prices will cause businesses to try to raise prices and may make consumers more willing to accept price hikes, fueling higher inflation. Raising interest rates tends to dampen spending, which discourages price increases.
The Fed raised its rate Tuesday and said in a statement the hurricanes have only temporarily reduced national employment and economic activity. Fed officials also noted that reconstruction efforts in the damaged areas will boost economic growth in coming months.
Indeed, the construction industry added 33,000 jobs last month, a bit above the average gain of about 20,000 a month for the previous six months, noted Ray Stone, an economist at Stone & McCarthy Research Associates.
This suggests “at least some of the post-hurricane rebuilding is under way,” Stone said in an analysis for clients. “We suspect that further and potentially much larger gains in construction payrolls are likely.”
The unemployment rate fell for white workers to 4.4 percent in October from 4.5 percent in September, the Labor Department said. The rate for black workers declined to 9.1 percent from 9.4 percent. The rate for Latinos slid to 5.8 percent from 6.5 percent.
Average weekly wages for most workers rose $2.71 to $549.93. That is not adjusted for inflation because the department has not yet released the inflation rate for October.