Economy Expands Strongly, Creating 413,000 New Jobs in October

A surge in manufacturing jobs helped the economy expand strongly during October, but the number of persons actively seeking work grew even faster, driving the unemployment rate up to 5.9%, the Labor Department said Friday.

Although the jobless rate, up from September’s 5.8%, rose for the first time in 13 months, many economists were encouraged by the impressive number of new jobs created, 413,000. But new workers outnumbered the new jobs, as the encouraging business climate drew 498,000 persons into the labor market.

‘There Are Jobs Out There’

When times are good, “people figure there are jobs out there, and they say, ‘I’ll try to find one,’ ” said Janet L. Norwood, commissioner of the department’s Bureau of Labor Statistics.

California’s jobless rate rose to 6%, up from 5.8% a month earlier. Economists traditionally view this figure as less significant than the larger national sample because many Labor Department officials believe that California continues to be a magnet for job seekers.

October’s unemployment survey was conducted before Oct. 19, the day the stock market’s Dow Jones industrial average plummeted 508 points. However, other economic barometers issued since the market crash, such as retail and automobile sales, have not shown any signs of weakness.

More Factory Jobs

Manufacturing employment jumped 65,000 in October and has risen by 220,000 since June. Norwood, testifying before Congress’ Joint Economic Committee, said factories provided “an especially bright spot” in October, adding that healthy job growth was recorded by firms that make metal products, machinery and electrical equipment. In addition, employment hit record levels in three other manufacturing fields: furniture, rubber and plastics and printing.

Factory overtime averaged four hours a week during October, the highest level in 14 years and further evidence of new health in the manufacturing sector.

Thus, despite the increase in joblessness for the month, most economists and business analysts remained encouraged. “The resurgence in the American economy means that, as employment prospects rise, more people are lured into the labor force,” said Richard Rahn, chief economist for the U.S. Chamber of Commerce.

The current economic expansion has entered its 59th month, a peacetime record. During that span, employment has risen by 14 million. “We feel very good about the economy,” White House spokesman Marlin Fitzwater said. “Unemployment remains extraordinarily low.”

Moreover, Norwood said, rising export sales by American companies are “consistent with the increases in factory employment over the last few months.”

October’s jobless rate of 5.9% covered the entire work force. The civilian jobless rate, which does not include members of the military, showed a level of 6% during October, up slightly from 5.9% the month before.

There were 114.9 million Americans working last month and 7.2 million unemployed. California reported 13 million persons at work and 822,000 unemployed.

Regional Differences

“There are enormous differences occurring from one part of this country to another,” Norwood said.

Texas, where the slumping oil industry is just beginning a difficult recovery, has a 7.8% jobless rate. At the other extreme, Massachusetts, which has a booming high-technology and services economy, has a jobless rate of 3.2%.