U.S. Job Gains Rebound in October
The U.S. saw a surge in hiring in October, beating economists’ expectations, and placing the economy back in recovery mode.
The number of jobs created jumped to 531,000 in October from September’s preliminary estimate of 194,000 jobs, according to the Bureau of Labor Statistics (BLS). The preliminary estimates for August and September were revised up by a total of 235,000 jobs combined, indicating the Delta variant weakness was not as debilitating as initially thought.
Total private employment was up 604,000 jobs, primarily in the service-providing sectors (+496,000 jobs) as Government employment fell by 73,000 jobs, almost all of it in state and local education. Schools are still having difficulties hiring bus drivers, temporary teachers, food service workers, and other staff. All other industry sectors reported job gains for the month.
The surge in hiring helped lower the headline or U3 unemployment rate to 4.6% from 4.8% in September. However, the decrease is likely due to fewer workers seeking jobs as the labor force participation rate was unchanged from last month at 61.6% and the number of workers not in the labor force increased as well.
The unemployment rate for working aged men (20+) fell 40 basis points (bps) to 4.3% while the rate for working aged women increased 20 bps to 4.4%. Both are more than 200 bps lower than one year ago. Working teens are still having difficulties finding work as the unemployment rate for 16-19-year-olds is currently 11.9%. The employment-population ratio ticked up slightly to 58.8% but is still 230 bps below pre-pandemic levels.
The number of unemployed dropped by only 255,000 to 7.4 million in October from 7.7 million in September with the aforementioned decrease in labor force participation. Still, that is down more than 3.6 million from one year ago. Initial unemployment claims fell to their lowest level since the COVID-19 pandemic began at 269,000 for the final week of October. However, the level of employment in the U.S. labor market is still about 4.2 million workers below the pre-pandemic employment level in February 2020.
The annual change in average hourly earnings of $1.44 (to $30.96) was 4.9% greater than last October’s rate and the largest annual change since February. Industry wage growth varied greatly with Leisure and Hospitality wages jumping 11.2% for the year, while Information employees registered a 0.5% annual decrease. Transportation and warehousing workers enjoyed a 6.2% annual increase in hourly wages, but most other industries averaged a 4.5% increase.
With the exception of Mining and Logging and Professional and Business Services, all industries reported unadjusted unemployment rates lower than the month before (although Professional and Business Services was unchanged at 4.4%, while Mining and Logging jumped to 10% from 7.3%). Despite reporting significant job losses in October (seasonally adjusted), the Government sector had one of the lowest industry unemployment rates at 2.2%, just behind of the Financial Services industry at 1.9%.
The percentage of workers that telework decreased to 11.6% in October from 13.2% in September, according to the BLS’s supplemental data measuring the effects of the coronavirus pandemic on the labor market. The rate of telecommuting will likely remain elevated over the next six to 12 months and will undoubtedly remain above pre-pandemic levels going forward as employers balance productivity and teamwork issues with employee satisfaction and competitiveness.
In other October BLS data, the number of people leaving or quitting their job increased from 788,000 in September to 840,000 in October as workers jostle for just the right position. The number of unemployed for 27 weeks or longer dropped further from 2.7 million in September to 2.3 million in October with the expiration of enhanced unemployment benefits. Those working part-time that want full-time work was virtually unchanged from last month at about 4.4 million, while the number of workers who prefer part-time positions increased by 216,000 to about 20.6 million.
Workers marginally attached to the labor force fell by about 300,000 from last October to 1.6 million and the number of discouraged workers stood at 460,000, down 134,000. Persons marginally attached to the labor force are those who currently are neither working nor looking for work but indicate that they want and are available for a job and have looked for work sometime in the past 12 months.
The U6 unemployment rate, which includes part-timers for economic reasons and marginally attached workers, fell to 8.3% in October compared to 8.5% last month and 12.1% in October 2020.
The strong job gains reported in October were spread among many industry sectors but were most prominent in those industries that still have the most ground to make up. Leisure and Hospitality, Trade, Transportation and Utilities, and Professional and Business Services accounted for almost 70% of October’s monthly gain but Education and Health Services and Manufacturing contributed significant gains as well. As with last month, Government employment recorded a seasonally adjusted monthly loss as state and local education hiring remains muted.
• The decline in Delta variant coronavirus cases brought more activity in restaurants and bars, spurring job gains to total almost 120,000 in October for this subsector and contributing to the Leisure and Hospitality industry’s monthly gain of 164,000 jobs. The arts, entertainment, and recreation subsector added 20,900 jobs for the month as well with patrons returning to theaters, casinos and sports venues.
• The Trade, Transportation, and Utilities industry gained 104,000 jobs in October, with more than half of them in transportation and warehousing (+54,400), spread among the couriers and messengers (+20,200), transit and ground transportation (+15,800), and air transportation (+9,200) subsectors. Retail trade added 35,300 jobs for the month split between food and beverage stores (+15,600) and general merchandise stores (+15,300). Wholesale trade added 13,500 jobs as well.
• The 100,000 jobs gained in the Professional and Business Services industry were almost evenly split between the high-paying professional and technical services subsector (+45,100) and the administrative and waste services subsector (+48,600). Temporary help services hiring (+41,100) bolstered this month’s gains, perhaps portending a continued recovery.
• The Education and Health Services industry’s monthly gain of 64,000 jobs was largely due to strong hiring in the health care sector (+37,200), with solid gains in home health care (+15,800) and nursing care facilities (+11,800). The social assistance sector added 9,700 jobs for the month while educational services added another 17,000 jobs.
• The Manufacturing industry gained a strong 60,000 jobs in October, as the durable goods sector added 41,000 jobs, primarily in the auto industry (+27,700). Nondurable goods manufacturing added 19,000 jobs for the month, with solid contributions from chemicals (+5,600) and printing and related activities (+4,200).
• The Construction industry gained 44,000 jobs for the month with a strong gain of 28,400 jobs in specialty trade contractors, mostly nonresidential (+19,300). The heavy and civil engineering construction subsectors gained 12,100 jobs as well.
• The Other Services sector had a strong gain of 33,000 jobs in October with an increase of 28,100 jobs in personal and laundry services, followed by repair and maintenance (+8,400).
• The Financial Activities industry added 21,000 jobs in October as solid gains in real estate and rental leasing (+12,400) were enhanced by gains in finance and insurance (+8,800), primarily in the securities, commodity contracts, investments, and funds and trusts subsector (+11,200).
• The Information industry gained 10,000 jobs for the month with strong gains in the motion picture and sound recording subsector (+11,300) offset by mild losses in other subsectors.
• The Mining and Logging industry gained 4,000 jobs in October led by the support activities for mining subsector (+3,200). The small logging subsector lost 600 jobs for the month.
• Government education employment cutbacks at the local (-43,400) and state (-21,500) levels reduced overall Government employment by 73,000 workers, with a mild loss of 3,000 jobs at the Federal level.