WASHINGTON - U.S. job growth likely picked up in October as employers hired staff for hurricane cleanup and rebuilding, but the economy isn't growing fast enough to make real inroads on unemployment, analysts said on Wednesday.
Economists believe 169,000 jobs were created last month, nearly double September's 96,000 increase, but the unemployment rate will likely stay at 5.4 percent since job gains are barely keeping pace with population growth.
"We need a lot more economic growth to make a big difference. The economy has to get through the shock of higher energy prices, in particular, in order to start generating more jobs," said Avery Shenfeld, senior economist at CIBC World Markets.
The Labor Department's closely watched payrolls report, out on Friday, is expected to show stronger job growth for October in part because of the restoration of jobs lost in hurricane-swept September.
"We think (the hurricanes) probably suppressed last month by 30,000 to 40,000 jobs, so we are factoring that into our forecast on the plus side," said Goldman Sachs economist Andrew Tilton, predicting a 150,000 overall payrolls gain.
"On the downside, it seems like some of the data we've been getting over the past several days have been a little less positive," he added.
The U.S. economy has cooled after a heady 2003, with growth slipping to a 3.3 percent annual rate in the second quarter and 3.7 percent in the third -- below the 4 percent-plus pace experts say is needed for real employment growth.
HEADWINDS
Friday's jobs report is also expected to show the work-week held steady at 33.8 hours and hourly earnings rose 0.3 percent, according to a Reuters poll of analysts.
The muted outlook comes amid mixed recent economic signs, including a report on Tuesday by employment consulting firm Challenger, Gray & Christmas that found planned job cuts stayed above 100,000 in October for a second straight month.
"The job market appears to be stuck in the mud," said John Challenger, chief executive officer of the firm. "Every time it looks as if things are going to rebound for the nation's workers, a series of reports deflates the optimism."
Tilton agreed, noting that continued labor market weakness adds to the headwinds facing U.S. consumers, whose appetites help determine job growth.
"Relatively slow employment growth, high energy prices, very low savings rates, the waning of mortgage refinancing activity, the lack of any new tax cuts or big spending increases on the horizon -- all of these suggest that consumer spending growth is likely to be significantly lower next year," he said.
Still, Anthony Chan, senior economist at JPMorgan Fleming Asset Management, sees the economy adding more than two million jobs next year as productivity growth wanes and some 500,000 people are hired over the next 12 months to rebuild after the summer's damaging hurricanes in the southeastern states.
Economists say even if October's jobs data disappoints, it won't stop Federal Reserve policy-makers from raising interest rates another quarter of a percentage point at their meeting Nov. 10, though a weak number may give them pause at future meetings.
"The employment report will color the Federal Reserve statement following their move as to how urgent or how anxious they are to keep raising short-term interest rates, but it definitely will not in any way influence what they are going to do (next week)," Chan said.
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