The number of new jobs soared at the sharpest rate in seven months in October, with a surprisingly strong 337,000 jobs added to payrolls — twice the 169,000-job growth that Wall Street economists had forecast.
The blockbuster number helped by a surge in construction activity as hurricane-wracked areas in the Southeast were rebuilt.
Not only was October a strong month but the number of jobs created in the two prior months was revised up -- to 139,000 in September instead of 96,000 and to 198,000 in August instead of 128,000.
Still, the unemployment rate (search) edged up to 5.5 percent from 5.4 percent in September, but that was because more people joined the search for employment, a potentially hopeful sign.
Economists were elated by the surge in payrolls. "It's now looking like that soft spot is clearly over," David Wyss, chief economist at Standard & Poor's, said of the recent slowdown.
The hurricanes clearly had an impact and 300,000-plus payroll increases aren't sustainable in the coming months, Wyss said. But monthly increases of 200,000 are realistic through the end of the year, he said.
The jobs report was good news for President Bush as he prepares for a second term. A generally weak job market plagued his re-election campaign, offering a political target to his Democratic challenger, John Kerry. The administration quickly took credit.
"It looks like the job situation is improving and that this will support consumer spending going into the holidays and offset some of the drag caused by high oil prices this year," said economist Gary Thayer of A.G. Edwards & Sons Inc. in St, Louis, Mo.
The resurgent labor market data come days before Federal Reserve (search) policy-makers, meeting Wednesday, are expected to nudge official short-term interest rates up for a fourth time this year, by a quarter percentage point, to lift the federal funds rate to 2 percent.
Analysts said it might mean that the U.S. central bank was less likely to halt its current rate-rising cycle after next week, as many had speculated before the jobs data, though it was too early to conclude that another hike was likely at this year's final policy-setting meeting in December.
"It should empower the Fed to clearly do something next week and probably raises the odds that they will do something in December," said Robert MacIntosh, chief economist with Eaton Vance Management in Boston.
Kathleen Utgoff, commissioner of the Bureau of Labor Statistics (search), noted that 71,000 new construction jobs -- the biggest since March 2000 -- "reflected rebuilding and cleanup activity in the Southeast following the four hurricanes that struck the U.S. in August and September."
Florida and other southeastern states were hit by severe storms that inflicted heavy damage to homes and businesses.
Reuters and the Associated Press contributed to this report.