More states add jobs, but many for temporary staff

In a sharp improvement, more than half of U.S. states added jobs in October, though economists said many of the gains likely occurred in temporary employment.

That’s customarily a positive a sign. Employers usually hire temporary workers before they add full-time jobs. But in this case, the temporary hiring may be inflated by the auto sector, which has boosted production to replace depleted inventories. As a result, the increase might not be sustainable.

Some of last month’s job gains also were in sectors such as education, health care and government, which have fared relatively well during the recession. By contrast, there’s little evidence that companies in hard-hit industries are hiring permanent staff.

Overall, 28 states added jobs in October. That’s up from only seven in September and eight in August. It’s also the largest number to record increases since 33 states did so in February 2008, according to the Economic Policy Institute, a think tank.

“It’s a positive signal … that states are mixed rather than uniformly bad,” said Jim Diffley, a regional economist at IHS Global Insight. Previous reports have all been “doom and gloom,” he said.

Many states that added jobs still saw an increase in their unemployment rates. The figures for jobs and unemployment come from separate reports. The unemployment rate is calculated from a survey of households, while the jobs count comes from a survey of businesses. The two don’t always match up.

The unemployment rates rose in 29 states in October from the previous month, the Labor Department said Friday. Thirteen states saw their jobless rates drop.

Michigan still had the nation’s highest unemployment rate in October: 15.1 percent. It was followed by Nevada at 13 percent, Rhode Island at 12.9 percent, California at 12.5 percent and South Carolina’s 12.1 percent.

California, Florida, Delaware and Washington, D.C., posted their highest unemployment rates on records dating to 1976.

Still, Michigan’s jobless rate fell from 15.3 in September, as the state gained 38,600 jobs, mostly in professional and business services sector. That category includes temporary workers.

Other states with heavy auto manufacturing activity also saw jumps in the professional and business category. They included Ohio, Kentucky and Tennessee.

Sophia Koropeckyj, managing director at Moody’s, said the gains could reflect greater use of temp workers by auto makers. The government’s Cash for Clunkers auto rebate program led to big sales gains in August, forcing auto makers to increase production to replace inventories.

But sales dropped after the clunkers program ended. And demand for new cars is likely to remain weak, Koropeckyj said.

“We won’t necessarily see a sustained increase” in auto employment, she added.

Koropeckyj said her firm hopes to see higher manufacturing and construction employment. That would reflect increasing business investment, a key ingredient for a healthy recovery. But it wasn’t apparent in Friday’s report, she said.

Still, there were other positive signs. Texas added 41,700 jobs, increasing its total payrolls for only the second time in the past year. Its unemployment rate edged up to 8.3 percent from 8.2 percent.

Most of Texas’ gains were in education, health care and government. California, which added over 25,000 jobs, saw a similar mix.

Oklahoma added 8,800 jobs, the fourth-highest in the country, mostly in professional and business services, education and health care.

Nevada, meanwhile, saw its unemployment rate drop to 13 percent, from 13.3 percent. That’s the first decline in its rate since November 2005. Much of the gain, however, was a result of a drop in Nevada’s labor force, as about 14,200 people gave up looking for work. People who stop looking for jobs are no longer counted as unemployed.

The national unemployment rate jumped to 10.2 percent in October, the highest in 26 years, from 9.8 percent in September.

Copyright 2009 The Associated Press.