Political Economist

Job growth slowed sharply last month, the Labor Department reported today, in a sign that high energy prices are hurting the economy and business executives have become worried that the damage might grow.

Still, wages in October rose at their fastest clip in more than two years, leaving open the possibility that the hiring slowdown will turn out to be temporary.

Employers added only 56,000 jobs in October, well below the 150,000 or so that are needed to keep pace with population growth. The Labor Department also said that 36,000 fewer jobs were added in August and September than previously estimated.

"Job growth has kind of stalled out," said Bill Cheney, chief economist of John Hancock Financial Services in Boston. "It's a puzzle," he added, noting that economic growth, retail sales and other indicators remained strong.

Hiring over the last three months has fallen to its lowest level since the summer of 2003, when the economy finally began to emerge from a three-and-a-half year hiring slump. Recent hurricanes have played a role, leaving many Gulf Coast residents out of work, but job creation was also weak across much of rest of the country last month, Kathleen P. Utgoff, commissioner of the Bureau of Labor Statistics, told Congress.

With interest rates rising, the hot housing market cooling and energy costs coming off a two-decade high, some executives and economists are concerned that consumer spending will slow in coming months. For now, though, most forecasters expect hiring to pick up before the end of the year.

As poor as the October hiring number was, the government's monthly employment report offered a number of other reasons for optimism.

The jobless rate fell slightly, to 5 percent from 5.1 percent. It is calculated from a survey of households, which economists consider less reliable than the much larger survey of businesses that produces the job-growth numbers.

But the household survey sometimes captures hiring by small companies before the business survey does, and in recent months it has offered a rosier picture of the economy. Last month, for instance, the number of workers holding part-time jobs because they could not find full-time work dropped to its lowest point since 2002.

The business survey, meanwhile, showed that the average wage for rank-and-file workers rose 8 cents last month, to $16.27 an hour. That is equal to an annualized increase of more than 6 percent.

"There is an increased level of business caution," Drew T. Matus, a senior economist at Lehman Brothers, said. "But these kind of wage gains don't make sense in light of the low level of hiring unless business just decided to pause for the month."

Still, wage growth has risen less than 3 percent in the last year, while inflation has been running close to 4 percent, effectively cutting many workers' pay.

The spike in inflation, caused largely by oil prices, seems to have soured many Americans on the economy, despite its continued growth. In a recent poll by the University of Michigan, 60 percent of people said that they expected the next five years to bring periods of widespread unemployment.

Not since 1992 have so many people given that answer. In the middle of last year, fewer than 40 percent of respondents did.

In October, car dealers, hotels, restaurants, and movie and music studios all cut jobs. Department stores added fewer jobs than they typically do during October; that shows up as a loss in the Labor Department report, because the government adjusts its numbers to account for normal seasonal variations.

Across the economy, in fact, employment rose by 702,000 jobs last month. But the government reported a seasonally adjusted gain of only 56,000 because most of the new jobs were part of the usual October jump in employment.

John E. Silvia, chief economist of Wachovia Corporation, said many of the sectors cutting jobs depended on consumers, who might eventually react to high gasoline and heating prices by cutting other spending, even if they have yet to do so. On Thursday, retailers reported surprisingly good sales numbers for October.

"It's hard to put this all together," Mr. Cheney of John Hancock said.

Job gains last month came from manufacturers, banks, hospitals, doctors' offices, residential contractors and computer-systems companies. The end of a strike by Boeing workers helped cause a jump in the number of workers at transportation-equipment factories, and the early rebuilding of the Gulf Coast probably pushed up construction employment.

Economists still expect the Federal Reserve to keep raising its benchmark short-term interest rate in coming months in an effort to tame inflation. Alan Greenspan, the outgoing Fed chairman, testified to Congress on Thursday that he viewed inflation as a bigger threat than weak economic growth.

The Fed has increased the benchmark federal funds rate, now at 4 percent, during each of its last 12 policy-setting meetings. It seems poised to do so again at the two remaining meetings before Mr. Greenspan's retirement early next year.

Investors are predicting that the Fed will increase the rate at one of the first two meetings chaired by Mr. Greenspan's successor, Ben S. Bernanke, but not at both, based on the price of a futures contract tied to Fed policy.

The widening of income inequality in recent years appeared to continue last month. Wage gains for workers at financial, information and professional-services companies - who tend to be highly paid - all received big raises in October. Employees at factories, warehouses, tourism companies, schools and health providers received smaller pay increases.

In his testimony this week, Mr. Greenspan said the country was going through "a very marked changed in the distribution of income."

He added: "We have clearly observed a major increase in the need for skilled workers to basically staff our ever increasingly complex technological capital stock."

The dropout rate in high schools and colleges is too high for the economy to be fully staffed with qualified workers, Mr. Greenspan said.

MAR DEL PLATA, Argentina, Nov. 4 - President Bush's foreign and domestic troubles trailed him to the opening day of an international summit here as tens of thousands protested in the streets and Mr. Bush deflected questions about his chief political aide, Karl Rove, who remains under investigation in the C.I.A. leak inquiry.

At a brief news conference with American reporters today at the Sheraton Mar Del Plata, Mr. Bush was asked four times about Mr. Rove, and four times refused to answer. The president did not take the opportunity to offer a public endorsement of Mr. Rove, nor did he address speculation in Washington about whether Mr. Rove would stay as his deputy chief of staff.

Asked if there were discussions at the White House about whether or not Mr. Rove would remain in his job, Mr. Bush replied that "the investigation on Karl, as you know, is not complete, and therefore I will not comment about him and/or the investigation."

Mr. Bush calmly added, "I understand the anxiety and angst by the press corps to talk about this." But he called the C.I.A. leak inquiry "a very serious investigation," and said that the White House is "cooperating to the extent that the special prosecutor wants us to cooperate."

At the same time, Venezuela's populist president, Hugo Chávez, rallied some 25,000 protesters in this beach resort's main soccer stadium. He declared a free trade accord backed by Mr. Bush as dead and accused the Pentagon of having a secret plan to invade his oil-rich country.

"If it occurs to U.S. imperialism, in its desperation, to invade Venezuela, a 100-years' war will begin," Mr. Chávez declared to cheers.

A few blocks from the hotel where the summit conference was taking place, some protesters threw stones and set fires this afternoon, and the police fired tear gas canisters to break up the demonstrations. Television images showed riot police arriving in vans and on motorcycles and horseback and massing near the crowds.

Several hundred demonstrators wearing bandanas or masks over their faces brandished clubs or fired slingshots at the police and set fire to a bank, according to reports by news agencies. The rioting broke out after a much larger, peaceful protest march involving several thousand people, the agencies said.

President Bush arrived here on Thursday night after one of the worst weeks of his presidency, only to be greeted by strong anti-American sentiment and taunts from Mr. Chávez.

Today, Mr. Bush said that he and Argentina's president, Néstor Kirchner, had agreed in talks that the United States' role in the region could be constructive and positive. Mr. Bush stressed the need for wise decisions to attract investments.

Standing next to President Kirchner, he also made what appeared to be a reference to the protests.

"It's not easy to host all these countries," he said, addressing Mr. Kirchner. "It's particularly not easy to host, perhaps, me," he said, drawing laughter.

The Summit of the Americas, a two-day, 34-nation gathering, opened to officially focus on creating jobs and promoting democracy.

Mr. Chávez, who has repeatedly accused the Bush administration of trying to assassinate him and invade his oil-producing country, is using the international summit meeting here to protest the administration's free trade message and to attempt a showdown with Mr. Bush, the man the Venezuelan government calls "Mr. Danger."

He said this week that his main goal at the meeting was the "final burial" of the proposed Free Trade Area of the Americas accord, which is already stalled.

"I think we came here to bury F.T.A.A.," Mr. Chávez said today, according to remarks reported by Reuters. "I brought my shovel."

Mr. Bush said today he would be "polite" when he meets Mr. Chávez.

The White House strategy is to ignore Mr. Chávez as much as possible.

"President Chávez has been pretty vocal about how he sees the summit and what he hopes to achieve at the summit," Thomas A. Shannon, the assistant secretary of state for inter-American affairs, told reporters on Air Force One on Thursday as it headed for Argentina. "I mean, he's going to behave the way he wants to behave."

Earlier this week, Mr. Bush did not denounce a longstanding request from Mr. Chávez that the Argentine government build a nuclear reactor in Venezuela for energy production.

"I guess if I were a taxpayer in Venezuela, I would wonder about the energy supply that Venezuela has," Mr. Bush said in an interview at the White House on Tuesday with a group of reporters from Latin American publications. "But maybe it makes sense." Mr. Bush added that "it's the first I've heard of it."

A little more than 24 hours later, Stephen J. Hadley, the national security adviser, appeared to backtrack when he noted that Mr. Chávez had asked a number of countries to build a nuclear reactor in Venezuela, and that he was far from a deal.

"I think that's because people recognize that it would be problematic for Chávez to be in the nuclear business, if you will," Mr. Hadley said, adding that "this trip, this summit, is not about Hugo Chávez."

But behind the scenes on Thursday, the United States and Venezuela were intensely jostling for advantage. As a result, negotiators were still struggling to come to an agreement over the final text of a joint communiqué, meant to be based on a consensus, that the leaders here hope to issue when the meeting ends on Saturday.

In a section on job creation, United States representatives have suggested taking note of "the 96 million people who live in extreme poverty" in Latin America and the Caribbean, subsisting on $1 a day or less. But Venezuela would agree to that statement, Latin American diplomats said, only if the following phrase were also included: "while in the United States there are 37 million poor."

The deepest disagreements had to do with the issue of free trade, which Mr. Bush has offered as the key to economic growth in the hemisphere. Washington is said to be pushing to issue a statement favoring the resumption of negotiations aimed at establishing the free trade accord, abbreviated F.T.A.A., but has met resistance not only from Venezuela but from Brazil and Argentina, too.

"The only language which is a problem is F.T.A.A.," said José Miguel Insulza, the secretary general of the Organization of American States. "We're moving toward a solution, not in the meeting but in the corridors."

At a parallel "People's Summit" in Mar del Plata on Thursday, organized by a coalition of left-wing, indigenous and antiglobalization groups, American proposals on free trade also came in for criticism, as did Mr. Bush himself.

"We Said No and No Means No: No to Bush, No to F.T.A.A. and No to Repaying the Debt," read one large banner at the conference, held in a group of tents and classrooms on the campus of a local university. Several thousand people attended.

"We've had enough of neo-liberalism and the damage it has inflicted on our societies," said Juan Montenegro, who came from Buenos Aires to take part. "Bush is trying to destroy Iraq with bombs and guns and Latin America with an economic program that will rob us of our sovereignty."

The "antisummit" began early in the week and was expected to culminate today in mass protest marches, led by Adolfo Pérez Esquivel, the Nobel Peace Prize winner, and Diego Maradona, the soccer idol.