If all goes well, the job market may continue to show the kind of gradual improvement posted in October. That's a big "if," though. The risks stretch from Washington to Europe.
Job growth continued to slog ahead in October as the economy showed signs of perking up. The Labor Department reported Friday that non-farm payrolls rose by 80,000 last month, weaker than forecasters had expected.
But Friday's report included revisions to recent months' data showing bigger gains than originally reported. A separate household survey chalked up another strong month, showing the economy has added a little over 1 million jobs in just the past three months. And the unemployment rate edged down to a six-month low of 9 percent from 9.1 percent in September.
"It feels like the economy is reaccelerating here," said Mark Zandi, chief economist at Moody's Analytics.
There were other positive signs in the report. The average number of hours worked held steady at 34.3 last month, and average hourly earnings crept up by 0.2 percent. Gains in temporary employment, which rose 15,000, are often a sign that companies are seeing the kind of increased demand that will lead to more hiring of permanent workers.
As private employers added 104,000 workers last month, government cut 24,000 jobs. Most of those cuts were from state and local governments wrestling with budget shortfalls brought on by a slowdown in revenues from income and property taxes.
Most sectors added jobs, though construction payrolls fell by 10,000 after a healthy gain of 29,000 in September. Manufacturers added 5,000 workers after a slight decline in September. Retail employment rose 17,800; health care companies created 16,300 new jobs, and professional and business services also added workers.
Still, the overall report was too weak to make a dent in the millions of workers sidelined over the past five years by the recession and weak recovery.
"We're still not generating the kind of job growth that's going to be enough to bring down the unemployment rate quickly," said Nomura Securities chief economist David Resler.
Though the unemployment rate ticked down a notch, that number is subject to statistical quirks that may not reflect underlying trends in job growth. One big reason is that the overall labor force, as defined by the Bureau of Labor Statistics, expands and contracts as new job seekers enter the market and others drop out, often because they get discouraged and quit looking for work. To see a continued, meaningful drop in the jobless rate, the economy needs to produce more like 200,000 jobs a month -- a sustained pace not seen in the last five years.
"This jobs report is still nothing to pop Champagne corks over," said Diane Swonk, chief economist at Mesirow Financial.
Employers have at least one good reason to pick up the pace of hiring: The cost of taking on new workers is falling. Earlier this week, the government reported that unit labor costs, which measure the cost of labor to produce a single unit of product, fell by 2.4 percent in the third quarter.
With the outlook so cloudy, manufacturing companies have been keeping inventories extremely lean to avoid getting stuck with unsold goods if the economy stumbles again. That could help boost production if demand picks up, one reason companies are looking more closely than ever at the strength of the upcoming holiday shopping season.
But clouds hanging over the weak recovery aren't likely to lift soon. Continued improvement in the job market could easily be derailed by the kinds of events that Fed Chairman Ben Bernanke this week attributed to “bad luck.”
Fed economists Wednesday lowered the central bank's growth forecasts and raised their projections for unemployment for the next three years. Fed policymakers also voted this week not to take action to spur growth as they wait for clearer signals on a number of risks that could derail an already weak economic recovery.
One of those risks is the ongoing debate over the federal budget, which will heat up again soon as a Nov. 23 deadline approaches for tax and spending recommendations from a congressional "supercommittee." The group has been silent about its progress since the debt ceiling debacle in July and August prompted Congress to create the 12-member bipartisan panel. Any repeat of the deeply partisan brinksmanship that roiled the financial markets in August could hurt business and consumer confidence and produce another drag on the economy and hiring.
The committee will make budget recommendations that would take effect over the next few years. But two controversial measures, extended unemployment benefits and a payroll tax cut, expire at the end of the year. Failure to renew those measures would create a significant drag on consumer spending, which would also weigh on the recovery.
Perhaps the biggest unknown is the financial crisis playing out in Europe, as leaders there wrestle with the looming default on Greece's unsustainable debt burden. After nearly two years of false starts, the latest proposals to resolve the crisis appear to have fallen short again, sending Europe's economy into recession. If the debt crisis deepens, Europe is likely to tip into recession, and the U.S. economy is at risk of being dragged down with it.