US businesses unfazed by shutdown, stepped up hiring; unemployment ticks up to 7.3 percent

  • Article by: CHRISTOPHER S. RUGABER , Associated Press
  • Updated: November 8, 2013 - 10:18 PM
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The October jobs picture in the U.S. was far better than economists expected, even despite the two-week federal government shutdown.

Photo: Luke Sharett, Bloomberg

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WASHINGTON — The U.S. economy may be sturdier than many had assumed.

Employers added a surprisingly strong 204,000 jobs in October despite the 16-day government shutdown, the Labor Department said Friday. And they did a lot more hiring in August and September than previously thought.

Not only that, but activity at service companies and factories accelerated last month.

Unemployment rose to 7.3 percent from 7.2 percent in September. But that was probably because furloughed federal workers were temporarily counted as unemployed.

"It's amazing how resilient the economy has been in the face of numerous shocks," said Joe LaVorgna, chief U.S. economist at Deutsche Bank.

Analysts say the economy might be able to sustain its improvement.

They note that job gains of recent months, combined with modest increases in pay, could encourage more spending in coming months. Growing demand for homes should support construction. 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.

And with the nationwide average for gasoline at $3.21 — the lowest since December 2011 — consumers have a little more money to spend.

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.

The Dow Jones industrial average surged 167 points to close at a record high Friday after the jobs report came out.

But the yield on the 10-year Treasury note climbed to 2.75 percent from 2.60 percent late Thursday, indicating some investors are worried the Fed might pull back on its bond-buying soon.

For some employers outside the Beltway, the government shutdown scarcely mattered.

Bob Duncan, founder and chief executive of Dallas-based American Leather, said his company is on track for a third straight year of steady revenue gains. American Leather custom-builds sofas, recliners and other furniture for Crate and Barrel and many smaller chains.

Duncan has boosted his 400-member workforce by about 2 percent in the past three months.

"I think everyone's kind of numb to it," Duncan said, referring to the budget battles in Washington.

More important to Duncan has been a spate of remodeling by hotel chains, many of which had postponed upgrades until recently. Sales have risen as a result.

Economists differed over how the robust jobs report might influence the Fed. Some said it probably isn't sufficient for the Fed to slow its $85-billion-a-month bond-buying program when it meets Dec. 17-18.

"The one month of job growth is not enough to allow them to pull the trigger," said Patrick O'Keefe, director of economic research at CohnReznick.

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