Rise in U.S. Unemployment a Sign of Growing Worker Confidence
Out-of-work Americans may be starting to believe the labor market has something to offer.
The civilian labor force, those people who are either employed or actively looking for work, jumped by 578,000 in October, Labor Department figures showed today in Washington. The number of people unemployed rose by 170,000, pushing the jobless rate to 7.9 percent from a three-year low of 7.8 percent in September, the report also showed.
“This is good news because we had gone through a long period where people were giving up and dropping out of the labor market,” said Ward McCarthy, chief financial economist at Jefferies & Co. Inc. in New York. “People are feeling a bit more chipper about the labor market.”
The news of more job opportunities may be triggering a self-reinforcing cycle of gains in confidence, spending and hiring that will help spur growth. Household purchases rose in September by the most in seven months, helping the world’s largest economy overcome slowdowns in business investment and exports.
The participation rate, or the share of the working-age population in the labor force, climbed in both October and September, the first back-to-back gains since early 2010. It had dropped in August to 63.5 percent, the lowest in more than 30 years, in part because some of those discouraged by futile job hunts abandoned the search.
About 58.8 percent of the U.S. population had a job last month, the most since August 2009, the report showed.
The unemployment rate is derived from a survey of about 60,000 households that is conducted by the Census Bureau and includes groups like the self-employed and agricultural workers.
A separate Labor Department survey of almost 500,000 work sites showed employers boosted payrolls by 171,000 last month, exceeding the most optimistic forecast in a Bloomberg survey of economists.
The healing labor market coincides with a surge in consumer confidence. The Thomson Reuters/University of Michigan sentiment index rose last month to the highest level since before the recession began five years ago. The Conference Board’s gauge reached the highest level since February 2008.
The share of consumers who told the Conference Board jobs were plentiful in October was the highest since September 2008, and the share who said there would be more jobs available in next six months was the highest since March 2011. Confidence among the unemployed last week was the highest since April in the Bloomberg Consumer Comfort Index survey.
Confidence measures “signal there is some true improvement in the labor market,” said Harm Bandholz, chief economist at UniCredit Group in New York. “Some frustrated people are coming back into the labor market because they think they have a chance to find a job.”
In October, the number of unemployed workers who were not in the labor force the previous month rose to 3.12 million, the most in more than a year, Labor Department data show. The number of discouraged workers, those who have stopped looking for a job and are therefore not included in the calculation of the unemployment rate, was 813,000 last month, down from 967,000 in the same month last year.
And while the jobless rate moved up last month, another measure of labor market slack pointed to progress. The so-called underemployment rate -- which includes part-time workers who’d prefer a full-time position and people who want work but have given up looking -- decreased to 14.6 percent, the lowest level since April.
“The labor market has started to strengthen again, and it’s going to improve further,” Bandholz said. “The latest information we’ve received confirms that view.”
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