WASHINGTON – The U.S. unemployment rate jumped to 10.2% in October as employers shed 190,000 jobs in the month, the Labor Department reported today.
The unemployment rate rose to the highest level since it was 10.2% in April 1983. Since the start of the recession in December 2007, the number of unemployed workers has risen by 8.2 million and the unemployment rate has grown by 5.3 percentage points.
Economists polled by Thomson Reuters expected employers to shed 175,000 jobs in October and for the unemployment rate to climb to 9.9%, according to the median estimate.
Manufacturing payrolls shrank by 61,000 and government payrolls were unchanged. Education, health and business services added workers in October.
The drop in September nonfarm payrolls was revised lower to 219,000 from the 263,000 initially reported. Payroll loses in August were revised to 154,000 from 201,000.
Average hourly earnings increased 0.3% to $18.72 from $18.67 in September. The average work week was 33.0 hours, unchanged from September.
Economists expected average hourly earnings to increase 0.1% and for the work week to increase to 33.1 hours, according to the median Thomson Reuters estimate.
Third quarter productivity figures, released Thursday by the Labor Department, offered an early sign of possible employment growth, according to economists. U.S. nonfarm unit productivity increased at a 9.5% annual rate in the third quarter, the largest increase in six years. The last comparable surge in productivity, 9.7% in the third quarter of 2003, marked a turning point for employment.
"It was exactly in September 2003 when what had been a jobless recovery became a recovery capable of generating meaningful job growth," said John Lonski, chief economist at Moody's Investors Service, in an interview before the report. Thursday's jump in productivity "raises the possibility that a number of businesses might in the not-too-distant future be compelled to add staff in order to meet customer demands and new orders," he said.
Initial jobless claims declined in the last week of October to 512,000, the lowest level since January. The four-week moving average for initial claims, a less volatile figure, has declined for seven consecutive weeks. Lonski said initial jobless claims would need to drop below 400,000 before payrolls could turn positive.
Congress this week passed legislation to extend unemployment benefits and President Obama is expected to sign it today.
On Wednesday, the Federal Open Market Committee left interest rates unchanged. "Household spending appears to be expanding but remains constrained by ongoing job losses," the Fed said in a statement.
Lonski said the Fed has never raised interest rates before unemployment has peaked. He said the Fed is likely to keep interest rates between zero and 0.25% "indefinitely."
