)
Employers added 204,000 new jobs to their payrolls last month, the Labor Department said on Friday. The unemployment rate, however, rose to 7.3% from September's nearly five-year low of 7.2%.
The department said there had been no "discernible" impact on payrolls from the 16-day federal government shutdown, adding that it had received an above average response rate from employers to its survey.
"Clearly what transpired was businesses viewed the shutdown as a temporary phenomenon and that the economy was still growing and would continue to grow going forward," said Russell Price, senior economist at Ameriprise Financial Services in Troy, Michigan.
The report also showed 60,000 more jobs created in September and August than previously reported, suggesting that the economy had upward momentum heading into the shutdown last month.
The better-than-expected increase in payrolls could raise expectations that the Federal Reserve will curtail its bond-buying program earlier than most economists were anticipating.
Indeed, U.S. stock index futures turned sharply lower on the report and prices for U.S. Treasury debt fell. The dollar rallied against the euro and the yen.
"We will see what happens behind the doors at the Fed but certainly there will be some reassessment of at least the possibility of a December or January tapering," said Cameron Hinds, regional CIO at Wells Fargo Private Bank in Omaha, Nebraska.
GRAPHICS:
Nonfarm payrolls: http://link.reuters.com/ram54t
Personal spending: http://link.reuters.com/hed44t
PCE and the Fed:http://link.reuters.com/qec92t
October's job gains pushed them above the 190,000 monthly average for the past 12 months, a sign of strength in the labor market. But there was some bad news as more people dropped out the labor force, pushing the participation rate to 62.8 percent, the lowest level since March 1978.
The department said the drop in the participation rate was not related to the government shutdown as furloughed government workers remained in the labor force.
The smaller survey of households from which the jobless rate is derived showed a 735,000 decline in employment. The Labor Department said the decrease was partly due to federal workers on furlough during the government shutdown.
The better-than expected payrolls count, however, is unlikely to change expectations of slower economic growth in the fourth quarter, given that consumer spending slackened and business inventories rose in the July-September period.
The private sector accounted for all the job gains last month, with a reversal in local government weighing on overall government employment. Government payrolls fell 8,000 last month.
Local governments had seen hefty job gains between August and September, the bulk of them in education - increases economists said were due to difficulties adjusting the data for seasonal fluctuations at the start of the new school year.
The leisure and hospitality industry added 53,000 new jobs, the most since April, while professional and business services added 44,000 new positions. Payrolls in the retail sector increased 44,400 last month.
Manufacturing employment rose 19,000, the most since February. There were also gains in construction, where payrolls rose 11,000.
The average work week held steady at 34.4 hours. Hourly earnings gained two cents and have risen 2.2 percent over the past 12 months.
(Reporting by Lucia Mutikani; Additional reporting by Chuck Mikolajczak and Herb Lash in New York; Editing by Andrea Ricci)
