US firms hiring more workers but overall jobless rate continues to rise

By GARETH MACKIE
Published on 03/11/2012 00:00

Employers in the US stepped up their hiring last month, but the unemployment rate rose as more people joined the jobs market.

Figures from the labour department showed the economy added 171,000 non-farm jobs in October, well above economists’ forecasts, driven by strong growth in the healthcare and retail sectors. The government also said 84,000 more jobs were created in August and September than previously estimated.

The news saw the dollar, which hit a six-month high against the yen before the data’s release, also climb against the euro, while gold prices fell as the figures tempered expectations of further stimulus measures from the US Federal Reserve.

However, Kathy Jones, fixed-income strategist at Charles Schwab, said: “We’re way short of where we need to be to bring down the unemployment rate to where the Fed would like to see, closer to 6 per cent than 8 per cent.”

The jobless rate inched up to 7.9 per cent, from 7.8 per cent in September, marking the first increase in four months, but the rise in the jobless rate was due to more workers entering the job market, as the US government only counts those who are looking for work as unemployed.

Daniel Solomon, an economist at the Centre for Economics & Business Research, said: “The fly in the ointment is long-term unemployment. The proportion of workless people who have been unemployed for 27 weeks or more has held steady at approximately 40 per cent since the financial crisis, symptomatic of underlying weakness in the US labour market.”