US added unexpectedly strong 204,000 jobs in Oct.

WASHINGTON — A burst of hiring in October added a surprisingly strong 204,000 jobs to the economy in a month when the government was partly shut down for 16 days. And employers added far more jobs in August and September than previously thought.

The unemployment rate rose to 7.3 percent from 7.2 percent in September, the Labor Department said Friday. But that was likely because furloughed federal workers were temporarily counted as unemployed.

The surge in jobs shows the economy was stronger in October than many economists had expected. Activity at service companies and factories also accelerated last month, an earlier report showed. The figures signal that many U.S. companies shrugged off the shutdown.

"It's amazing how resilient the economy has been in the face of numerous shocks," said Joe LaVorgna, chief U.S. economist at Deutsche Bank.

Growth could remain healthy in coming months and perhaps pick up next year, economists say. Growing demand for homes should support construction. And auto sales will likely stay strong because many Americans are buying cars after putting off big purchases since the recession struck nearly six years ago.

Job growth is a major factor for the Federal Reserve in deciding when to reduce its economic stimulus. The Fed has been buying bonds each month to keep long-term interest rates low to encourage borrowing and spending.

Stocks rose in late-morning trading as investors assessed the stronger-than-expected job growth. But the yield on the 10-year Treasury note surged to 2.74 percent from 2.60 percent late Thursday. That showed that some investors worry that the healthier job growth might prompt the Fed to pull back on its bond buying soon.

Economists differed about the consequences for the Fed. Some said last month's solid hiring probably isn't sufficient for the Fed to slow its $85-billion-a-month bond-buying program when it meets Dec. 17-18.

"The one month of job growth is not enough to allow them to pull the trigger," says Patrick O'Keefe, director of economic research at CohnReznick. "It leaves them on hold at least for the next meeting."

Others said the job growth might prod the Fed to start slowing its stimulus by year's end.

"In our opinion, the data would justify the Fed reducing the pace of its asset purchases in December," Paul Ashworth, chief U.S. economist at Capital Economics, wrote in a research note.

The government's report showed that employers added an average of 202,000 jobs from August through October — up sharply from an average of 146,000 from May through July. And they added 45,000 more jobs in August and 15,000 more in September than the government had previously estimated.

Private businesses added 212,000 jobs last month. That was the most since February. By contrast, federal government jobs fell by 12,000.

"While we have to take today's report with a grain of salt, we are impressed by the strength of the report," said Dan Greenhaus, chief global strategist at BTIG, a brokerage firm. "Given the impact of the shutdown, we have to wait until November's report to get a fuller picture of what's happening this fall but we're happy enough in the meantime."

Some consumers may spend more as the effect of tax increases that took effect at the start of the year diminishes. In addition, banks are returning to health and may soon lend more freely. Even Europe is slowly recovering, and growth in Japan has picked up, which could boost U.S. exports.

Some companies expect a healthy holiday shopping season and are staffing up accordingly. UPS is filling 55,000 temporary jobs for the holidays. UPS says it expects to pick up 34 million packages on Dec. 16, which it thinks will be the season's highest-volume day.

One troubling detail in the report: The percentage of Americans working or looking for work fell to a fresh 35-year low. But that figure was likely distorted by the shutdown.

About 800,000 government workers were furloughed for all or part of the shutdown, which lasted from Oct. 1 through Oct. 16. Many were counted as unemployed and were considered on temporary layoff.

But the furloughed workers were still counted as employed by the government survey that calculates job growth because they were ultimately paid for their time off. Better-paying industries boosted job gains: Manufacturers added 19,000, the most since February. And construction firms gained 11,000 jobs.

Hiring also jumped in lower-paying fields. Retailers added 44,400 employees. Hotels, restaurants and entertainment firms added 53,000 jobs.

Some earlier reports had hinted that hiring was improving. Retail stores, shipping companies, and other services firms stepped up hiring in October, according to a private survey of service firms.

And the number of people seeking unemployment benefits has fallen back to pre-recession levels after four weeks of declines. Applications for unemployment benefits are a proxy for layoffs. Their steady decline indicates that companies are cutting fewer jobs.

Economic growth accelerated in the July-September quarter to an annual rate of 2.8 percent, the government said Thursday. That was up from a 2.5 percent annual rate in the April-June quarter.

But greater restocking by businesses drove much of the increase last quarter, a trend that may not be sustainable. Consumers and businesses slowed their pace of spending over the summer.

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Lawyers wrapping case in Detroit bankruptcy trial

DETROIT — Objectors to a Detroit bankruptcy are confusing careful and deliberate planning by state officials with pursuing bankruptcy at all costs, attorneys representing Detroit's state-appointed manager argued Friday.

They "want to punish the governor and treasurer for contingency planning, for doing their jobs," said lawyer Matthew Schneider, the state's chief legal counsel. "This was never about predetermining a Chapter 9 filing. This was only about careful consideration."

Attorneys representing Detroit's state-appointed manager were making their final case on Friday to a federal judge who will determine if the city can fix its finances in bankruptcy. Final arguments are continuing throughout the day from the city, retiree groups, unions and pension funds.

The city in July became the largest municipality in the U.S to file for Chapter 9 protection, but Judge Steven Rhodes gets the final say on whether Detroit is eligible for a restructuring overseen by the court. Critics claim emergency manager Kevyn Orr wanted bankruptcy for months and didn't want to try good-faith negotiations before filing.

But Schneider told Rhodes that the bankruptcy filing was always a "last resort" and contingency planning doesn't "mean you want the storm to come."

Rhodes said he found it "factually impossible" for attorneys representing Orr to conclude that negotiation with creditors was "impracticable" while arguing they negotiated in good faith with them.

Attorney Bruce Bennett said he disagreed, and noted that it's widely understood that reaching an out-of-court settlement is a "great thing" but "extremely difficult." He said a proposal for creditors released in June and subsequent meetings with them laid out in great detail the city's financial problems — which nobody disputed — and prescriptions for solving them, but no group came forward with a credible counterproposal.

"Nobody was hiding the ball," he said. "Everyone understood that negotiations were likely to fail."

Sharon Levine, an attorney representing the American Federation of State, County and Municipal Employees, is expected to lead off closing arguments for lawyers representing bankruptcy on Friday afternoon. She previously argued that talks between Detroit and its unions should have lasted months, not weeks, and the city spent months plotting a path to Chapter 9 instead of seeking compromise that could keep it out of bankruptcy.

Orr, a bankruptcy expert who was appointed emergency manager last March by Michigan Gov. Rick Snyder, has said Detroit has at least $18 billion in long-term debt, including $3.5 billion in pension shortfalls.

If Detroit is found eligible to stay in bankruptcy, the case would turn to how to solve the debt. The city has said it could propose a plan by the end of the year. Meanwhile, a team of mediators has been meeting with all sides in the hope of reaching an out-of-court compromise.

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Facebook already likes having office in Cambridge

It's a homecoming for Facebook — at least partially— and the social media giant's new neighbors are expecting the company to do more than just occupy space.

The social network, founded at Harvard by Mark Zuckerberg and others, announced yesterday it had opened an engineering office in Cambridge, which will be led by Ryan Mack, a Facebook engineer. Last night, Facebook jumped feet first into the local tech scene, hosting an infrastructure tech talk for entrepreneurs in Somerville.

"We're already seeing Facebook chart a course to become a valued member of the local tech community," said Cambridge Innovation Center managing director Geoff Mamlet. Facebook Boston is located in the same building as the innovation center.

Mack said the decision to come back to Boston and Cambridge was an easy one. "The tech community here is world-class," he said.

The engineering team will focus on networking, storage and security and while it will be small, Mack said they are hiring.

"This announcement reinforces our state's standing as a place where innovators and technology companies want to be," said House Speaker Robert DeLeo, who sent a letter to Zuckerberg last year asking him to bring Facebook back to the Boston area.

Mamlet said some companies could benefit from Facebook's decision to open an office here.

"Companies are much more likely to perform an acquisition in a market where they have a presence," he said.

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Massachusetts economy’s running ahead of U.S.

A recovering housing market and resilient consumers boosted the Bay State economy in the third quarter, but federal fiscal policies continue to restrain growth, according to a University of Massachusetts journal.

Massachusetts real gross domestic product grew at an annual rate of 3.5 percent, well above the national rate of 2.8 percent and more than double the state rate of 
1.7 percent in the second quarter, according to the latest MassBenchmarks published by the UMass Donahue Institute in collaboration with the Federal Reserve Bank of Boston.

The improvement was due to slow but better job growth, a recovering housing market, rising incomes and a higher rate of spending on goods subject to sales tax — all providing some relief from the fiscal drag of the across-the-board cuts in federal spending known as sequestration and higher payroll taxes than last year.

"The state housing market, as well as consumer spending, have both firmed up, perhaps more so than nationally," said Robert Nakosteen, executive editor of MassBenchmarks and professor of economics and statistics at the UMass-Amherst Isenberg School of Management. "However, pushing the other way, the sequester and global weakness is hurting the state. The balance seems to be favorable."

Both Nakosteen and MassBenchmarks' senior contributing editor, Alan Clayton-Matthews, cautioned, however, that their estimate of the state's economic growth in the third quarter is based on incomplete data because last month's federal government shutdown caused a delay in the state's employment report for September until Nov. 22.

Using the national employment report for September and the historical average relationship between U.S. and Massachusetts employment, MassBenchmarks estimated the state's missing September payroll employment data at 1,000 new jobs, indicating that state employment expanded at an annualized rate of growth of 
0.7 percent in the third quarter. In contrast, during the second quarter, payroll employment declined at a 
0.3 percent annualized rate, said Clayton-Matthews, associate professor of economics and public policy at Northeastern University.

Nationally, the 2.8 percent annual rate at which real GDP grew in the third quarter was "a tepid number by itself, but still the fastest growth seen so far in 2013," said Doug Handler, chief U.S. economist at IHS Global Insight in Lexington.

"The consensus growth rate was around 2 percent, with most of the gap traceable to a buildup of inventories," Handler said, referring to goods that collect in warehouses and on retailers' shelves.

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The Ticker

Markets take hit

Frenzied buying in Twitter shares grabbed Wall Street's attention yesterday, as the social media stock surged well above expectations, while major indexes fell, with the S&P 500 suffering its worst daily decline since August.

The broader market was hurt by weak earnings from Whole Foods and Qualcomm. The tech-heavy Nasdaq index recorded its biggest daily decline in a month.

The Dow Jones industrial average was down 152.90 points, or 0.97 percent, at 15,593.98. The Standard & Poor's 500 Index was down 23.34 points, or 1.32 percent, at 1,747.15. The Nasdaq Composite Index was down 74.61 points, or 1.90 percent, at 3,857.33.

Disney reports gain above expectations

Walt Disney Co. reported a gain in profit that beat Wall Street expectations, boosted by higher spending by summer visitors to U.S. theme parks and increased sales of toys and other consumer products.

The media company posted diluted earnings per share of 77 cents for the quarter ended in September, according to a statement released yesterday. That beat the 76 cents per share that was the average estimate of analysts surveyed by Thomson Reuters.

Net income for the quarter rose to $1.4 billion, a 12 percent gain from a year earlier.

Tax refund ID theft growing

More Americans' identities were stolen in tax refund crimes in the first six months of 2013 than in all of 2012, said a U.S. Internal Revenue Service watchdog yesterday, describing the problem as "a growing epidemic."

Tax refund fraud has exploded in recent years. Scammers typically use stolen names and Social Security numbers to file phony electronic tax forms for IRS refunds.

TOMORROW

 Labor Department releases employment data for October.

 American Student Assistance, a Boston-based nonprofit that helps people make better decisions about financing their education and repaying student loans through its SALT financial education program, has named Bryan Spence, left, to the newly created position of director of the Massachusetts SALT Alliance. In his new role, Spence will play a critical role in raising SALT's presence within Massachusetts. He will be charged with establishing a network of partnerships.

 Arrowstreet is pleased to announce the appointment of four firm leaders to the position of principal. The promotion of architects David Bois, Amy Korte, Sean Selby and Larry Spang acknowledges their leadership roles and substantial contributions to the practice of architecture.

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Twitter stock closes 73% above IPO price

Shares of Twitter skyrocketed yesterday on its first day of trading on the Nasdaq in what analysts said was an emotional reaction to the highly anticipated, high-profile IPO.

"It's a passion play," said Max Wolff, chief economist at ZT Wealth. "Buying the IPO of Twitter is like buying the opening night of the Rolling Stones reunion tour."

The stock closed at $44.90, 73 percent above its $26 initial offering price after hitting as high as $50.09. That closing price put the value of the social network that reinvented communication in 140-character bursts at 
$31 billion — nearly as much as Yahoo Inc. and just below Kraft Foods.

The shares shot up because of the combination of a unique company, a relatively scarce initial offering and "stratospheric" attention, said Wolff.

"My guess is you'll see the shares settle below where they are," he said, predicting they'll end up around $30 to $32.

Jeffrey Sixa, president and chief investment officer of Sica Wealth Management, said any price over $40 reflects "hype."

Research firm Outsell Inc. put Twitter's fundamental value at about half of the IPO price, said analyst Ken Doctor. That figure is based on factors such as revenue and revenue growth.

"That's not unusual," Doctor said. "Especially for tech companies. You are betting on a big future."

Wolff said Twitter's $31 billion valuation after the first day of trading is not necessarily wrong, but "that's going to be tough to grow into." Still, Wolff said, "It's a good company with a bright future."

While the soaring stock price made Twitter founders rich, Boston-based Spark Capital also is in for a significant payday. The venture capital firm, led by Bijan Sabet, invested in Twitter in 2008, and owns 6 percent of Twitter shares.

Twitter, which hasn't turned a profit in the seven years since it was founded, worked hard to temper expectations ahead of the IPO, but all that was swiftly forgotten with the stock's opening surge.

The company had initially pitched an offering price of $17 per share, but raised the price twice after the deals became overbooked. The company received orders for about 30 times as many shares as it offered, according to Bloomberg.

The most anticipated initial public offering of the year was carefully orchestrated to avoid the glitches and eventual letdown that beset Facebook's first appearance on the Nasdaq 18 months ago.

Facebook closed just 23 cents above its $38 IPO price on that first day and later fell much lower. It took more than a year for Facebook shares to climb back above $38.

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Worcester health insurer lays off 62 workers

WORCESTER, Mass. — A Worcester-based health insurance provider has announced that it is laying off 62 workers, or about 6 percent of its total workforce.

Fallon Community Health Plan President and Chief Executive Patrick Hughes said in a written statement Thursday that the insurer made the cuts to operate as efficiently and effectively as possible.

The Telegram & Gazette (http://bit.ly/1bcPjQD ) reports that the statement said the decision was made "following a very careful review of our current and projected costs."

Fallon continues to employ about 1,060 workers.

The health insurer posted net income of $7.3 million during the second quarter ended June 30. At that time, it had 229,385 members.

Fallon reported that workers affected by cuts are receiving severance and job placement services.

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Information from: Telegram & Gazette (Worcester, Mass.), http://www.telegram.com

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NBC wins space race, will televise Branson flight

NEW YORK — NBC has won the television space race.

The network announced Friday it has signed a deal with Richard Branson's Virgin Galactic to televise the company's first commercial space flight. Branson and his two adult children, Holly and Sam, will be the first private passengers to travel into space next year through his company. The launch will be part of a three-hour special "Today" show.

NBC's Peacock Productions unit also will offer programming leading up to the flight across the company's other outlets, including CNBC, MSNBC, SyFy and The Weather Channel.

Virgin Galactic's SpaceShipTwo will leave from the company's terminal in New Mexico.

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CBS admits error in Benghazi '60 Minutes' story

NEW YORK — CBS News said Friday that it was misled by a "60 Minutes" source who claimed he was on the on the scene of a 2012 attack on the U.S. mission in Benghazi, Libya when it now turns out there are serious doubts about whether he was.

Reporter Lara Logan said that "60 Minutes" would correct its Oct. 27 report on Sunday's broadcast. A video copy of that story was taken off the "60 Minutes" web site late Thursday.

Logan had interviewed Dylan Davies, a security contractor who claimed he took part in fighting at the mission, and gave him the pseudonym Morgan Jones. But the Washington Post reported the contractor's real name four days later, and said that Davies had written a report to his employers telling them he was not at the site.

CBS said Davies had told them that he had given an interview with the FBI saying he was at the fighting, but The New York Times reported late Thursday that the FBI said Davies' report to them was consistent with what he told his employer — that he wasn't there.

At that point, CBS said the story was under review, but the FBI revelation caused CBS to lose confidence in its source. Logan came out on the CBS News morning show Friday to apologize.

"The most important thing to every person at '60 Minutes' is the truth, and today the truth is that we made a mistake," Logan said.

Logan said Davies had told them before the "60 Minutes" story aired that he had told his employer that he wasn't there, but the broadcast wasn't aware of the written report to the British-based contractor Blue Mountain until the Washington Post story was published.

Asked by "CBS This Morning" co-host Norah O'Donnell why she stood by the report initially when Davies had admitted lying to his employer, Logan said, "because he was very upfront about that from the beginning. That was always part of his story."

Davies' book, "The Embassy House: The Explosive Eyewitness Account of the Libyan Embassy Siege by the Soldier Who Was There," was published last month by Threshold Editions, a conservative imprint of Simon & Schuster. CBS News has also said that it was wrong not to disclose in the "60 Minutes" report that the publisher is part of CBS Corp. which also owns CBS News.

A Threshold spokeswoman, Jennifer Robinson, said that it had not seen the FBI report. "In light of these revelations, we will review the book and take appropriate action with regard to its publication status," she said Thursday night.

Congressional Republicans have insisted that the Obama administration misled Americans about the Benghazi attack, playing down a terrorist assault in the heat of the presidential campaign. Five GOP-led House committees have investigated, demanding documents and witnesses from the administration while complaining that the Obama team has been stonewalling.

A day after the CBS report, Sen. Lindsey Graham, R-S.C., said he would block President Barack Obama's nominees for Federal Reserve chairman and Homeland Security chief until the administration allowed survivors of the assault on the U.S. diplomatic mission to talk to members of Congress.

In fact, a diplomatic security agent who was an eyewitness to the Sept. 11, 2012, raid that killed U.S. Ambassador Chris Stevens and three other Americans already had been deposed by the House Oversight and Government Reform Committee.

Graham and several House and Senate Republicans held a Capitol Hill news conference on Oct. 30 in which they cited the CBS report.

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http://www.cbsnews.com

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Associated Press National Writer Hillel Italie in New York and writer Donna Cassata in Washington also contributed to this report.

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No Joke!: The Onion ending last print editions

CHICAGO — In poking fun at current events, satirical newspaper The Onion often finds a way to heap ridicule on the newspaper industry.

But just like some news outlets it lampoons, The Onion announced Friday it is ending the last of its print editions and moving to an all-online format.

Print advertising revenue has been drying up during the industry's transition to a digital-dominated media landscape, and newspapers have been gradually scaling back or eliminating print editions entirely.

The Onion's last print editions — in Providence, R.I., Milwaukee and the paper's home city of Chicago — will run on Dec. 12.

Onion, Inc. President Mike McAvoy said the company's focus in recent years has been on "growing the digital side" of the business.

"While the print edition is an important part of our history, we are very excited for the opportunities that come with prioritizing digital for even greater company growth," McAvoy said in a statement.

Started by two students at the University of Wisconsin-Madison in 1988, the free satirical weekly has made people laugh for a quarter-century with headlines such as this one from its latest edition: "Giant burrito to solve all of Area Man's problems for 6 precious minutes."

The switch-over to all-digital formats will allow the company's team of humorists to produce more timely content, increase video output and "become a better satirical representation of the current news media," McAvoy said.

In recent years, the company has veered into video, creating the Onion News Network and working with Amazon on a TV pilot called "Onion News Empire."

"We believe our move to an all-digital brand, alongside our content — which is funnier than ever — will position us for continued success the next 25 years," McAvoy said.

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