WASHINGTON, Nov 3: The US employers stepped up hiring in October and a small increase in the jobless rate was due to more workers restarting their job hunts, a hopeful sign for a lacklustre economy that has been a drag on President Barack Obama’s re-election bid.

Employers added 171,000 people to their payrolls last month, the Labour Department said on Friday. The government also said 84,000 more jobs were created in August and September than previously estimated.

The jobless rate edged up a tenth of a point to 7.9 per cent, but that was due to workers surging back into the labour force.

Only people who are looking for a job count as unemployed. “This report is consistent with the emerging picture of an economic recovery that is continuing to regain traction after grinding to a halt earlier this year,” said Millan Mulraine, an economist at TD Securities in New York.

The stronger-than-expected data was the last major report card on the economy before Tuesday’s presidential election. Polls show Obama and Republican Mitt Romney locked in a dead heat in a race in which the nation’s feeble jobs market has been front and centre.

Romney cast the elevated jobless rate as a signal of the economy’s ills. “The economy is at a virtual standstill,” he said in a statement. His top economic adviser, Glenn Hubbard, said a jobs growth figure closer to 300,000 would be needed to show an economy with real vigour.

Obama said the report showed the economy moving in the right direction. “We have made real progress,” he told a rally in Hilliard, Ohio. Despite the political wrangling, the impact of the report on the election could be muted as most voters’ perceptions on the economy are likely mostly fixed by now. However, the jobs report could make it more difficult for Romney to drive his message home.

While the rise in the jobless rate was expected, the increase in payrolls beat even the most optimistic forecast in a Reuters poll. The US stocks opened higher but then turned down, while the dollar strengthened and prices were mixed for long-dated US government debt.

A full recovery from the 2007-09 recession remains distant and even sustained monthly job gains of 171,000 would bring down the unemployment rate only slowly. The jobless rate, which peaked during the recession at 10 per cent, remains about three percentage points above its pre-recession level.

The persistently high unemployment rate has undercut wage growth. Average hourly earnings for production and non-supervisory employees fell one cent last month to $19.79, and were up just 1.1 per cent in the year through October, the smallest rise since at least 1964. Weakness in the labour market makes it unlikely the Federal Reserve will lose its resolve to keep easy money policies in place until the economy shows more vigour.

“We have substantial scope to use monetary policy to stimulate the economy,” San Francisco Fed Bank President John Williams told a group of community leaders in Salt Lake City.

In October, the jobless rate rose because 578,000 people entered the workforce. Many of them got jobs, and a gauge of the proportion of working age Americans who have a job hit a three-year high at 58.8 per cent.—Reuters