Economists Discuss Electoral Impact of October Jobs Report

Friday morning's jobs report contained some good news with the bad, but analysts doubt there's enough strength in either direction to influence the upcoming presidential election.

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The ""Bureau of Labor Statistics"":http://www.bls.gov/ (BLS) reported the unemployment rate rose slightly to 7.9 percent in October from 7.8 percent in September. Even though the rate increased, the upward movement was due to a rise in entrants into the labor market, not a decrease in jobs. The economy added 171,000 jobs in October, while August and September were revised upward by a combined 84,000.

The BLS also noted Hurricane Sandy had no discernible effect on October's data since the household survey data was completed before the storm.

In a written response from ""Capital Economics"":http://www.capitaleconomics.com/, economist Paul Ashworth wrote, ""We doubt that October's Employment Report is either strong enough or weak enough to have any marked impact on next week's presidential election.""

In its analysis, Capital Economics highlighted both improvements and disappointing figures.

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Positives found in the BLS report included the increase in the labor force, which grew by 578,000, and the employment-to-population ratio, which reached a three-year high of 58.8 percent.

However, the research firm addressed temporary employment, which has been mostly unchanged over the past three months. In addition, average weekly hours worked remained unchanged from 34.4, while the annual growth rate of average hourly earnings slipped to 1.6 percent, a 26-year low, the research firm stated.

In the response, Ashworth concluded, ""Overall, this report is sure to be spun politically by both sides. The bottom line is that the labour market remains unusually weak, but whether it is weak enough to prevent Obama getting re-elected is anyone's guess.""

Economist Nigel Gault at ""IHS Global Insight"":http://global.ihs.com/ also questioned the extent to which the report will impact the election's outcome.

""Politically there was something for both presidential candidates to grab onto. President Obama can point to faster job creation, while Governor Romney can say that the unemployment rate is higher now than in January 2009 when the president took office. On balance the report is better than expected, which should help the incumbent, but not sufficiently so to be a game-changer,"" wrote Gault.

""Fannie Mae"":http://www.fanniemae.com/portal/index.html chief economist Doug Duncan expects the jobs report to be a positive for housing.

""The overall fundamentals--a low interest rate environment, rising housing price expectations, and an improved pace of healing in the labor market--are setting the stage for a solid housing recovery,"" Duncan said.