US businesses boost hiring despite the shutdown

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WASHINGTON (AP) — The 16-day government shutdown didn’t seem to hurt the economy after all.

 

U.S. employers added a surprisingly strong 204,000 jobs in October, the Labor Department said Friday. And they added far more jobs in August and September than previously thought.

 

Activity at service companies and factories also accelerated last month in the midst of the shutdown.

 

All of which suggests the U.S. economy may be sturdier than many analysts had assumed.

 

The unemployment rate rose to 7.3 percent from 7.2 percent in September, the Labor Department said. But that was probably because furloughed federal workers were temporarily counted as unemployed.

 

“The economy weathered the government shutdown surprisingly well,” said Ted Wieseman, an economist at Morgan Stanley. “Businesses looked through the shutdown, remained confident in the growth outlook and kept hiring.”

 

One weak link in the economy recently has been consumers, who spent cautiously over the summer, holding back growth. But the solid job gains in recent months, combined with modest increases in hourly pay, could encourage more spending.

 

Other trends have raised hopes that the economy will remain healthy in coming months: Growing demand for homes should support construction. And auto sales are likely to stay strong because many Americans are buying cars after putting off big purchases since the recession struck nearly six years ago.

 

Job growth is a major factor for the Federal Reserve in deciding when to reduce its economic stimulus. The Fed has been buying bonds to keep long-term interest rates low and encourage borrowing and spending.

 

Stocks rose sharply in afternoon trading as investors assessed the stronger-than-expected job growth. But the yield on the 10-year Treasury note surged to 2.75 percent from 2.60 percent late Thursday. That showed that some investors worry that the healthier job growth might prompt the Fed to pull back on its bond-buying soon.

Read more http://bigstory.ap.org/article/us-adds-204k-jobs-unemployment-rises-73-pct

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