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WASHINGTON (AP) — Companies created more net new jobs in October than in any month since April, evidence that businesses are shedding their previously cautious attitude toward hiring.
But the unemployment rate remained stuck at 9.6 percent for the third straight month.
Still, the job gains should give Americans a bit more income to spend, providing some support to the sluggish economy. That higher income, combined with the potential extension of the Bush tax cuts and the Federal Reserve's move earlier this week to push interest rates down, could help the economy pick up steam, economists said.
The employment report showed much stronger job gains than Wall Street analysts had expected.
"This is not a gangbusters report but it is very important," said Carl Riccadonna, an economist at Deutsche Bank. "It shows us that the momentum in employment is building."
It was the 10th straight month of increased hiring in the private sector. And it was the first overall increase in jobs since May. The layoff of temporary census workers had depressed the payroll figures over the summer.
Businesses added 159,000 net new jobs last month, the Labor Department said Friday. The department also revised up its figures for August and September to show an additional 103,000 private-sector job gains. The revised figures also show that companies have added more than 100,000 net new jobs in each of the past four months.
Governments at all levels cut 8,000 jobs, resulting in a net gain of 151,000 jobs in October.
Employers also extended the average work week to 34.3 hours, up by one-tenth. That increase boosts workers' incomes and provides fuel for more consumer spending, which drives about 70 percent of the economy.
Average weekly paychecks rose to nearly $780, the report said, a gain of about 3.5 percent compared to a year earlier.
But for those out of work, the picture is still bleak. About 14.8 million people say they were unemployed in October, a figure that hasn't improved much since the year began.
And last month's job gains are still modest, given that the recession technically ended in June 2009. Just a year after the steep 1981-1982 recession ended, employers were regularly adding more than 300,000 jobs a month.
It takes up to 150,000 net new jobs a month just to keep up with population growth.
The 2001 and 2003 tax cuts, slated to expire at the end of this year, look more likely to be extended in the wake of Tuesday's election victories for Republicans, who favor making the cuts permanent. Republicans won a majority in the House and gained six seats in the Senate.
President Barack Obama has said the cuts should expire for the top 2 percent of income earners, while Republicans want to make them permanent for everyone. But earlier this week, White House spokesman Robert Gibbs said Obama was open to a temporary extension of all the cuts.
On Friday, Obama said he's "open to any idea, any proposal" that will help jump-start the economy. He also said the country cannot afford two more years of partisan gridlock in Washington.
On Wednesday, the Federal Reserve announced a plan to buy $600 billion in Treasury bonds in an effort to accelerate economic growth. Those purchases are intended to lower interest rates on mortgages and other loans and spur more borrowing and spending.
Tom Porcelli, an economist at RBC Capital Markets, said the Fed's move will likely be more effective in an improving economy than a weak one.
That's because job gains and other signs of health will give consumers and businesses the confidence to take out more loans, make investments and hire. Without that extra confidence, borrowing won't increase as much even at lower interest rates.
So far this year, the economy has added 874,000 jobs and over a million in the private sector. But that comes after the nation lost more than 8 million jobs in 2008 and 2009.
When people who've given up looking for work or those who are working part time but would prefer full-time jobs are included, the so-called underemployment rate was 17 percent last month, down slightly from September's 17.1 percent figure.
October's job gains were concentrated in relatively few sectors: Retailers added 27,900 positions, likely in preparation for the holiday season. Temporary agencies added 34,900. Restaurants and bars hired 24,400 people. And education and health care added 53,000 positions.
Government at all levels shed only 8,000 jobs, a much better showing than September's steep drop.
The construction industry added a small number of jobs, while the manufacturing sector shed 7,000 positions. Factory employment has been roughly unchanged since May.
The economy is growing, but at a weak pace. The Commerce Department said last month that gross domestic product, the broadest measure of the nation's output, increased by 2 percent in the July-September period. That isn't fast enough to encourage much hiring.
The number of long-term unemployed, or those out of work for more than six months, rose to 6.2 million. That sets up a challenge for Congress because the extended unemployment benefits program is set to expire at the end of this month. That program provides up to 99 weeks of unemployment aid.
That means only the standard 26 weeks of jobless benefits will be available starting in December, unless Congress extends the program. More than 1 million people could lose benefits each month, according to the nonprofit National Employment Law Project, unless Congress the program is continued.