Hiring strong despite housing woes
WASHINGTON (Reuters) - Job growth surged in October at twice the rate expected and factory orders edged up, suggesting the world's largest economy was strong enough to handle a deep housing slump without falling into recession.
The relatively upbeat data on Friday failed to dispel gloom hanging over financial markets, which remained preoccupied by concerns that a credit crunch stemming from rising mortgage defaults could yet undermine the economy's health.
The Labor Department said 166,000 non-farm jobs were added in October, enough to support consumer incomes and spending in the approaching holiday shopping season.
Separately, the Commerce Department said new orders at U.S. factories gained 0.2 percent in September despite forecasts for a decline, mainly because machinery and computer orders rose.
U.S. stock prices closed slightly higher after seesawing throughout the session, as investors wrestled with their fears of whether a credit crisis was deepening.
The Dow Jones Industrial Average .DJI closed up 27.23 points at 13,595.10 while the high tech-laden Nasdaq composite index .IXIC rose 15.55 points to end at 2,810.38.
Prices for U.S. Treasury debt securities climbed as investors sought out lower-risk assets. The benchmark 10-year note was trading 7/32 higher in price for a yield of 4.32 percent, down from 4.35 percent late on Thursday, while the two-year note US2YT=RR was up 4/32 for a yield of 3.69 percent compared with 3.76 percent on Thursday.
WHY SO GLOOMY?
Some analysts said the healthy jobs report should have allayed concerns about the economy's direction.
"I don't know why the Fed is cutting rates in this environment, with full employment and when consumers are spending," said economist Richard Yamarone of Argus Research in New York. "The economy is in no apparent need of stimulus, barring any unforeseen seize-up."
The Labor Department said the national unemployment rate in October was unchanged at 4.7 percent. It revised September hiring to show that 96,000 jobs were added instead of 110,000 it reported a month ago and said 93,000 new jobs in August instead of 89,000 that it previously reported.
But soaring oil prices, above $90 a barrel, and concerns about a credit crunch and a deepening slump in housing cast a pall over markets. A senior U.S. Treasury Department official, Undersecretary Robert Steel, told Congress that foreclosures will remain above average for the next 1-1/2 years.
The monthly jobs report is one of the first readings on fourth-quarter economic activity. The strong October hiring number may allay some concern that consumers will be so fearful about their jobs that they will be reluctant to spend in the crucial Thanksgiving-to-Christmas holiday season.
UPBEAT ON PROSPECTS
In a telephone interview, Commerce Secretary Carlos Gutierrez said he saw no sign of downturn on the horizon. Continued...
