More jobs added to the economy in October

November 12, 2013

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After a delay of one week due to the government shutdown, the U.S. Department of Labor released the October Employment Situation Summary. While the  jobs report showed some signs of improvement, employment for Americans between the age of 25 and 34 - largely considered the most likely to become first-time home buyers - fell slightly from 75 percent to 74.6 percent, according to the Bureau of Labor Statistics.

According to the report, 204,000 jobs were added to the economy in October, well above previous estimates of 120,000. Most economists believed the government shutdown would have some impact on the rate of employment and were surprised to see improvement.

Federal Reserve perspective
Federal reserve officials have previously stated they will not begin tapering until unemployment reaches 6.5 percent nationally. The unemployment rate edged back up slightly in October to 7.3 percent, according to the jobs report. While the rate did drop slightly to 7.2 percent in September, it was mostly due to fewer Americans that were still actively looking for work.

While more jobs is an encouraging sign for the economy, it may be too soon to call it a turning point in the rate of recovery.

"It is an encouraging number," Dennis Lockhart, president of the Federal Reserve Bank of Atlanta, told Bloomberg. "I would be reticent to draw very profound conclusions to one month's positive jobs number."

In addition to an overall unemployment rate of 6.5 percent, the Fed would like to see jobs being added to the economy at a rate of at least 200,000 per month. Because the October jobs report reached that goal, the question of whether or not the Central Bank will begin to taper its bond-buying program next month is once again being debated.

"I would not take off the table at least consideration at that time," Lockhart stated to Bloomberg. "The question of changing the mix of accommodative tools ought to be on the table at every meeting for the foreseeable future."

Economists are split when it comes to estimating when the Fed will decide to reduce its fiscal policy of stimulus spending. When it does, low cost mortgages are likely to see increases in their interest rates, though this may end up strengthening the housing market in the long run.