Job growth could hint at some improvement

U.S. employment growth was likely too weak in October to pull down the nation's lofty jobless rate, though it may have been strong enough to suggest some economic momentum is building.

Nonfarm payrolls rose 95,000 last month, according to a Reuters survey, after expanding by 103,000 in September.

While that would appear to suggest hiring was slowing, September's count was lifted by the return of 45,000 striking Verizon Communications workers.

The report will tell us things are not falling off the table like they did during the recession, but it's not going to get better any time soon either, said John Canally, an economist at LPL Financial in Boston.

The unemployment rate is seen holding at 9.1 percent for a fourth straight month.

The Labor Department will release its closely watched employment report for October at 8:30 a.m. Friday (8:30 a.m. EDT).

Economic indicators ranging from first-time filings for unemployment benefits to planned hirings by private firms have all pointed to an improvement in the jobs market last month.

Still, the labor market remains the Achilles heel of the economic recovery, and progress at putting 14 million unemployed Americans back to work remains painfully slow.

It is a challenge for President Barack Obama, who faces a tough fight for reelection next year, though signs of a modest improvement could buy the Federal Reserve extra time before loosening monetary policy further to aid growth.

The U.S. central bank on Wednesday lowered its growth forecasts and raised its projections for unemployment. While the Fed announced no new measures to stimulate the economy, it said it was considering the possibility of additional mortgage debt purchases.

But with fears of a fall back into recession receding, the pressure for more monetary policy stimulus has eased somewhat. Europe's debt crisis could, however, push the recovery off the rails.

The debt crisis, which has rattled global financial markets and pushed consumer confidence to recession levels, remains far from being resolved, and investors are keeping a close eye on developments in Greece.

The Obama administration has struggled to come up with policies to generate sufficient unemployment amid stiff opposition from Republicans.

Fed Chairman Ben Bernanke took lawmakers to task on Wednesday after the U.S. central bank concluded its two-day policy meeting. It would be helpful if we could get assistance from some other parts of the government to work with us to help create more jobs, he said.

LACKLUSTER JOB GROWTH

While the economy is now in its second year of recovery, only a fraction of the more than 8 million jobs lost during the recession have been recovered.

The monthly pace of employment growth remains well below the level deemed necessary to keep pace with demographic trend, much less absorb the large pool of workers displaced during the recession, said Millan Mulraine, a senior macro strategist at TD Securities in New York.

Even disregarding the natural increases in the labor force, at the current pace of employment growth it will take over four years for the labor market to re-absorb the 7 million previously displaced workers.

The economy needs to expand at an annual rate of at least 2.5 percent over a sustained period and consistently add 150,000 jobs to keep unemployment from rising.

Growth accelerated to a 2.5 percent rate in the third quarter from a tepid 1.3 percent in the prior period.

Private employers are expected to have added 120,000 jobs last month, offsetting an estimated drop in government payrolls of 25,000. Public employment has fallen every month this year, with the exception of August, as state and local governments grapple with budget constraints.

In the private sector, job gains in October are seen as being almost across the board. Employment in the goods-producing sector is seen increasing for a second straight month, though construction could see a pull-back after a surprise addition of 26,000 jobs in September.

Economists attributed the gains to rebuilding and cleaning up after Hurricane Irene, which battered the East Coast. But an increase in spending on nonresidential structures in recent months could mean more gains in construction jobs.

Manufacturing payrolls probably fell for a third straight month. The sector, which has been the main pillar of support for the recovery, is cooling.

In the service sector, retail employment likely rose for a second straight month.

Although businesses appear not to be expecting strong holiday sales, judging by their careful management of inventories, there are signs of strong underlying demand.

Further gains are expected in professional and business services, and more increases in temporary hiring -- seen as a harbinger for future hiring. Hiring in the health care and social assistance sector, which has been boosted by the swelling ranks of retirees, is also expected to show further growth.

The average work week is seen steady at 34.2 hours, with hourly earnings rising 0.2 percent after advancing by a similar margin in September.

(Reporting by Lucia Mutikani; Editing by Leslie Adler)