U.S. economy adds 166,000 jobs

WASHINGTON — Shrugging off Wall Street's latest turmoil and concerns about an economic slowdown that has yet to materialize, U.S. employers added 166,000 non-farm payroll jobs in October, the Labor Department reported Friday.

The unemployment rate held steady at 4.7 percent last month. The strong job numbers came on the heels of Wednesday's Commerce Department report that the economy grew at a surprisingly robust 3.9 percent annual rate from July through September.

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The latest jobs report highlights the strengths and weaknesses in a business-cycle expansion that began in November 2001.

The services sector continued to power employment and more than compensate for weaker sectors. The services industry has added 368,000 jobs this year — 65,000 new professional and business service jobs in October alone. The government, health care, leisure and entertainment, and education sectors all showed job gains.

Manufacturing employment fell by another 21,000 jobs to 203,000 lost for the year. That's despite a boom in exports fueled by the weak dollar.

Jobs tied to housing continued to fall too. Since its peak in September 2006, residential construction employment has fallen off by 125,000 jobs. To the benefit of the broader economy, this has been offset by gains in commercial and other nonresidential construction. But job losses keep mounting in mortgage lending and related activities. More than 56,000 people in this sector have lost their jobs since February.


This is from McClatchy News:Graph showing U.S. unemployment rate. From McClatchy News.

I'll admit, I'm baffled by this job market. High-wage manufacturing jobs are being outsourced to low-wage factories in China. Construction jobs have dropped due to the housing bust, and the oversupply of unsold houses on the market. At the same time, we're seeing an increase in low-wage services industries--restaurant, health care, retail jobs. The only thing I can think of is that the housing, and mortgage, collapse has yet to affect the job market. The mortgage mess has only now started to affect the big financial institutions, with Citigroup, Merrill Lynch, and Credit Suisse reporting big losses due to write-downs in assets. The U.S. economy has mainly been propped up by exports, but I'm not sure how long that can last. We're in a period of dangerous economic uncertainty here, and I still fear it is going to get worst.