WASHINGTON — Apparel specialty stores and discounters boosted payrolls in October, as the overall economy added 171,000 jobs, a Labor Department report showed Friday.

Despite the uptick in overall jobs, the unemployment rate inched up to 7.9 percent in October from 7.8 percent in September, a sign that more unemployed people entered the job market looking for work. The government measures the unemployment rate by the number of people who are actively searching for jobs.

The Labor Department also made an upward revision in employment numbers for August and September, adding a combined 84,000 more jobs than previously reported.

It was the government’s last employment report before Tuesday’s election and painted a picture of steady job growth in the economy, but it also provided fodder for both President Obama and Republican challenger Mitt Romney.

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Apparel and accessories stores added 3,100 jobs in October to employ 1.39 million, while general merchandise stores, a category that includes discounters and department stores, added 5,600 jobs to employ 3 million.

Department stores continued to show weakness in employment, trimming 2,000 jobs last month to employ 1.5 million.

In the manufacturing sector, apparel employment rose by 100 to 146,900. Mills making apparel fabrics and yarns trimmed 800 from payrolls to employ 118,400, while mills making home furnishings products added 400 jobs to employ 113,500.

“Specialty apparel stores have had healthy sales growth and presumably that is the main reason [for job growth],” said Scott Hoyt, director of consumer economics at Moody’s Analytics. “Consumers have been out buying and that’s supporting employment.”

Hoyt said over the past year specialty apparel stores have shown the strongest employment growth, adding 33,500 from October 2011 through this October. By contrast, department stores have shed 45,800 jobs and general merchandise stores have cut 30,500 in the same period.

“The October payroll survey showed a brighter picture of the labor market, both in faster headline job creation and in upward revisions to previous months,” said Nigel Gault, chief U.S. economist at IHS Global Insight. “Here was good news in both construction and retail employment, consistent with the better news coming in from the housing market and with an improving consumer mood.”

Gault noted that the impact of Hurricane Sandy, which hit New York and New Jersey particularly hard, was not reflected in the October jobs report because the storm was so late in the month.

Hoyt warned that employers are still extremely cautious about hiring because of the pending fiscal cliff.
“Anecdotally, it seems to impact hiring. Businesses are being more cautious than they otherwise would be because they don’t know what will happen early next year,“ Hoyt said. “Certainly, most measures of business confidence are quite low and trending lower, unlike consumer confidence.”

With four days until Election Day, the camps for both candidates seized on the employment numbers.
“While more work remains to be done, today’s employment report provides further evidence that the U.S. economy is continuing to heal from the wounds inflicted by the worst downturn since the Great Depression,” said Alan Krueger, chairman of the Council of Economic Advisors.

On the other side, Glenn Hubbard, a Romney economic adviser and dean of the Columbia Business School, speaking on CNBC’s “Squawk Box,” said: “We [are adding] 150,000 jobs a month on average this year and last year which is roughly speaking treading water in the labor market The median duration of unemployment remains elevated. A really vigorous recovery is a number like 250,000 to 300,000 jobs a month. This is simply not good enough.”

Gault at IHS Global Insight said there was “something for both presidential candidates to grab onto” in the employment report.

“President Obama can point to faster job creation, while Gov. Romney can say that the unemployment rate is higher now than in January 2009 when the President took office. On balance the report is better than expected, which should help the incumbent, but not sufficiently so to be a game-changer,” Gault said.