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Employment Report: Jobs Rise By 151,000 But Unemployment Rate Holds Steady At 9.6%

Employment increased 151,000 in October, reversing a drop in September. The labor force dropped by 250,000, leaving the overall unemployment rate for the U.S. at 9.6 percent. The biggest job gains were in service industries -- retailing and health care -- while construction and manufacturing jobs showed little change. Including people having to settle for part-time work, the true rate of unemployment is still very high, at 17 percent. Because the U.S. economy is based on consumer spending, with so many people out of work or afraid to spend, employers don't see any reason to start hiring again.

After large losses in government jobs in September, overall employment rose by 151,000 in October, all in the private sector. As in the past few months, jobs increased in health care, and the important retail sector gained 28,000 jobs, echoing recent strong earnings from retail companies. Temporary help services gained 35,000 jobs, and now employ over 2.2 million.

People having to settle for part-time work fell in October by 318,000, after rising for two months. Including part-timers and discouraged workers, the true unemployment rate is 17.0 percent -- little better than the 17.3 percent reported at the end of 2009, and an increase from earlier this year.

Government jobs fell by 8,000, mostly at the state and local level, after falling in September as a lack of federal funds caused layoffs in education.

Jobs at goods-producing businesses continued to be weak. Manufacturing fell by 7,000, while construction jobs rose by 5,000.

Recent corporate earnings reports show that companies are selling plenty of goods and services outside the U.S. Domestic demand is still weak, though, with net final sales for 3Q 2010 rising less than one percent.

The underlying reason for nagging unemployment is the shocks consumers have been through in the last few years. Recent moves by the Federal Reserve are meant to build confidence and get money into consumer's hands. For the moment, until the new Congress gets settled in, it's what we have to rely on from the government. What we really need is for domestic businesses to gain some optimism and start hiring.