US economy adds 171K jobs, jobless apps fall to 363k , rate rises to 7.9%

In the final throes of a spirited campaign, President Barack Obama and rival Mitt Romney are awaiting one more measure of the nation

President Barack Obama waves after delivering a speech during a campaign rally at the University of Colorado, in Boulder, Colo., Thursday, Nov. 1, 2012. (AP Photo/Brennan Linsley)

WASHINGTON (AP) -- U.S. employers added 171,000 jobs in October and hiring was stronger over the previous two months than first thought. The unemployment rate inched up to 7.9 percent from 7.8 percent in September because the work force grew.

The Labor Department's last look at hiring before Tuesday's election sketched a picture of a job market that is gradually gaining momentum after nearly stalling in the spring.

Since July, the economy has created an average of 173,000 jobs a month, up from 67,000 a month from April through June.

Still, President Barack Obama will face voters with the highest unemployment rate of any incumbent since Franklin Roosevelt. The rate ticked up because more people without jobs started looking for work. The government only counts people as unemployed if they are actively searching.

Applications for U.S. unemployment benefits dropped 9,000 to a seasonally adjusted 363,000 last week, a level consistent with modest hiring.

The report comes just before Friday's October jobs data, the last broad snapshot of the economy before the presidential election Tuesday. The still-weak job market has been a top issue for voters.

The Labor Department said Thursday that the four-week average of applications for unemployment aid, a less volatile gauge, declined to 367,250. The average has been around that level for three months.

A department spokesman said Superstorm Sandy had no direct effect on the number of applicants. The report covered the week ending Oct. 27, before the storm reached shore.

But the devastation and economic disruptions that the storm caused this week will likely increase applications for unemployment aid in coming weeks. Workers who have been temporarily laid off because of the storm are expected to seek benefits.

In some states, though, applications might decline if unemployment offices are closed or laid-off workers are unable to request benefits.

Weekly applications have fluctuated between 360,000 and 390,000 since January. During that time, employers have added an average of about 150,000 jobs a month. The unemployment rate has declined from 8.3 percent in January to 7.8 percent in September.

But few expect unemployment to drop sharply in the months ahead, given the still-modest pace of hiring.

"We continue to see employment growth making little progress," Bricklin Dwyer, an economist at BNP Paribas, said in a note to clients.

The total number of people seeking unemployment benefits rose to just over 5 million in the week that ended Oct. 13, the latest period for which figures are available. That's up slightly from 4.9 million in the previous week.

The economy picked up slightly this summer after a sluggish spring. Growth rose to a 2 percent annual rate in the July-September quarter, up from 1.3 percent in the April-June quarter. Consumers and the federal government spent more, and the housing market contributed to growth for the sixth straight quarter.

Still, the economy is growing too slowly to rapidly bring relief to roughly 12 million out-of-work Americans. With the unemployment rate still high, steady growth of more than 3 percent is generally needed to create a sufficient number of jobs.

When the unemployment rate fell to 7.8 percent in September, it was the first time the rate had fallen below 8 percent since January 2009, President Barack Obama's first month in office.

The rate fell in September because a government survey of households found a huge increase in the number of people who had jobs. Still, a jump in part-time employment accounted for most of the gain.


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