Unemployment rate falls to five-year low

updated 2:23 p.m. ET Nov. 3, 2006

WASHINGTON - The unemployment rate dropped to a five-year low of 4.4 percent in October as employers added 92,000 new jobs — flashing a picture of a strong labor market as the midterm elections draw near.

The latest report, released Friday by the Labor Department, showed that the civilian unemployment rate fell 0.2 percentage point from 4.6 percent in September. It marked the third month in a row that the politically prominent jobless rate declined.

The tally of new jobs added to the economy in October fell short of economists expectations for an increase of around 125,000 positions, however. Nonetheless, job gains in both August and September turned out to be much stronger than previously estimated — and that took much of the sting out of October’s less-than-expected payroll performance.

“The job market is healthy even though the economy has been slowing. This report tells us the economy is holding its own, not spiraling downward,” said Stuart Schweitzer, global market strategist for JPMorgan Asset and Wealth Management.

Friday’s report provided the last snapshot of the nation’s employment scene before next week’s elections.

President Bush was quick to seize upon the figures as evidence that his economic policies are working.

“Tax cuts have led to a strong and growing economy and this morning we got more proof of that,” the president said at Republican rally in Springfield, Mo. Bush also expressed confidence that Republicans would keep control of Congress. Of the Democrats, he said: “ ... now they’re forecasting they’re going to win the election. If their elections forecasts are as good as their economic forecasts, we are going to have a great day on November the seventh.”

How voters view job availability, wage growth and other economic conditions is likely to play a role in the balloting nationwide on Tuesday. Republicans, fighting to retain control of Congress, say Americans are mostly better off, while Democrat rivals disagree, saying low- and middle-income workers are struggling.

President Bush’s approval rating on the economy is at 40 percent, among all adults surveyed in an AP-Ipsos poll. That remains near his lowest ratings. Those surveyed trusted Democrats more than Republicans to handle the economy.

CNBC VIDEO Jobs report applauded Nov. 3: White House economic advisor Edward Lazear discusses the October employment data on CNBC Friday. CNBC

Workers saw solid wages gains last month.

Workers’ average hourly earnings climbed to $16.91 in October, a sizable 0.4 percent increase from September. That increase was bigger than the 0.3 percent rise economists were expecting. Over the last 12 months, wages grew by 3.9 percent.

Growth in wages is good for workers, but a rapid and sustained advance makes economists fret about inflation flaring up. That’s not good for the economy or workers’ pocketbooks, ultimately, because inflation can eat into everybody’s buying power.

The hunt for a job got shorter.

The average time that the unemployed spent in their search for work in October was 16.5 weeks, an improvement from the average 17.4 weeks registered in September.

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