The United States (U3) unemployment rate for October was 7.9% — up from 7.8% in September — as the country added 171,000 non-farm jobs last month, according the U.S. Bureau of Labor Statistics. Meanwhile, government jobs decreased by 13,000. It is the last such release before Tuesday's presidential election between President Barack Obama and Mitt Romney. Although the country added 171,000 jobs in October, the increased size of the nation's workforce contributed to the slight increased in the U3 unemployment rate. Markets reacted in bullish fashion.
October's 7.9% (U3) unemployment figure reflects the percentage of the total workforce who are unemployed and are actively looking for work. It does not include unemployed members of the workforce who are not actively looking for work; nor does it factor in workers with part-time jobs who are seeking full-time employment. When these workers are included, the (U-6) un/underemployment rate for October was 14.6%, down from 14.7% in September.
On Thursday morning, the ADP non-farm payroll estimate indicated that the U.S. had added 158,000 jobs last month, beating expectations of 138,000. This figure represents the estimated change in the number of employed people during October, excluding the farming industry and government. Meanwhile, first-time unemployment claims dropped last week to 363,000 from 371,000 the prior week.
According to a Bloomberg survey of 91 economists, it was expected that the October's jobless rate would tick up to 7.9%, with many of those surveyed citing slowing global demand as the reason why employers have curbed hiring. What impact the report will have on the election is anyone's guess. Romney can point to the increase in the U3 rate, while Obama can cite the 171,000 jobs added. In all likelihood, however, Friday's jobs report will have little effect on the presidential election.
In September, the U.S. added a modest 114,000 jobs, but the U3 unemployment rate decreased by 0.3%, leading some to speculate that Obama's Department of Labor had "cooked the books" to finagle the rate to below 8%. Those claims were quickly debunked.
Markets reacted bullishly, as Friday morning equity futures see-sawed around the previous close. The jobs data release sent Dow futures soaring:
Crude oil (West Texas Intermediate) also spiked:
Meanwhile, gold -- regarded as a safe-haven investment by many -- dropped upon the news: