money October jobs report: Economy added 638,000 jobs as unemployment rate fell to 6.9%
U.S. employers brought back more jobs than expected in October and the unemployment rate improved by a greater than anticipated margin. Still, improvements in both metrics have decelerated considerably from earlier this year during the initial stages of recovery during the pandemic period.
The Department of Labor released its monthly non-farm payrolls report Friday at 8:30 a.m. ET. Here were the main results from the report, compared to consensus estimates compiled by Bloomberg:
Non-farm payrolls: +638,000 vs. +580,000 expected and a revised +672,000 in September
Unemployment rate: 6.9% vs. 7.6% expected and 7.9% in September
Average hourly earnings, month-over-month: 0.1% vs. 0.2% expected and 0.1% in September
Average hourly earnings, year-over-year: 4.5% vs. 4.5% expected and a revised 4.6% in September
Friday’s jobs report also saw revisions to the last couple months’ worth of payrolls. August employment was upwardly revised to see a gain of 4,000 jobs to 1.493 million, and the change for September was revised up by 11,000 to 672,000.
U.S. stock futures, which had been trading sharply lower earlier during the pre-market session, cut some of their declines after the release of the better-than-expected jobs report.
Leisure and hospitality industries contributed a significant portion of jobs to October’s overall rise in payrolls, as the areas hardest hit earlier on during the pandemic continued to recover. Employment in these industries rose by 271,000, though this sum was a step down from the 406,000 jobs added back in September. Elsewhere within the service sector, professional and business services jobs rose by 208,000, increasing significantly from the 122,000 brought on during the previous month. Retail trade jobs also increased by more than 103,000.
Utilities industries were the only area in the private sector to see net job losses during October. Government employment, however, slid by 268,000, with 147,000 of these due to losses from temporary 2020 Census workers.
“The 638,000 rise in non-farm payrolls in October is stronger than it looks as it included a 147,000 drop in temporary Census employment and, alongside the big fall in the unemployment rate, it suggests that the labor market recovery still has plenty of momentum,” Andrew Hunter, senior U.S. economist for Capital Economics, said in a note Friday morning. Excluding the decline in government jobs, private payrolls rose by 906,000 last month following a jump of 892,000 in September.
“The slowdown in hiring in leisure and hospitality might be an early sign that virus concerns were starting to weigh on the sector but, at 271,000 last month, hiring remains much stronger than it was back in August,” Hunter added. “In any case, that was offset by larger gains in retail, construction and professional & business services payrolls.”
U.S. employers have brought back fewer jobs on net in every month since June, when payrolls rose by a record 4.78 million as stay-in-place orders and lockdowns lifted and allowed many businesses to restart operations. That trend continued in October, as the economy only slowly brought back payrolls that had been lost at the start of the pandemic.
And employment is still down by about 10 million payrolls since the beginning of the pandemic, since net job increases in each of the past six months have still not compensated for the historic declines in each of March and April. And 21.5 million Americans are still receiving some form of unemployment insurance, according to the Labor Department’s latest weekly jobless claims report, for a sum that has improved from a pandemic-era peak of more than 30 million, but held multiples above the total from the same time last year.
The October jobs report also continued to reflect a worrying trend seen in the past several months’ worth of data: Many individuals’ temporary furloughs or layoffs have become permanent. The number of so-called permanent job losers stayed about steady at 3.7 million in October, for a sum of 2.4 million above the level from February. And the number of long-term unemployed Americans, or those jobless for 27 weeks or more, jumped by 1.2 million to 3.6 million last month to account for about one-third of the total unemployed.
Still, the overall unemployment rate ticked lower again in October for the sixth straight month of improvements. The labor force participation rate also improved to 61.7% from 61.4%, reflecting an increase of 724,000 individuals into the civilian labor force.
The release of the October jobs report comes as coronavirus case counts worsen in the U.S. The country topped 100,000 new infections in a single day for the first time ever on Wednesday, according to data cited by the Washington Post. The latest resurgence in virus cases likely began too late in October to have generated a meaningful impact on the jobs report due out Friday, given that the survey week for the report takes place around the 12th of each month. However, the outbreak may present risks for the labor market going forward.
“The rise in COVID cases in recent days has elevated concern about the outlook for the economy before availability of safe and effective vaccines,” Mark Hamrick, Bankrate.com senior economic analyst, said in an email Friday morning. “Even so, the economic recovery remains intact.”
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Emily McCormick is a reporter for Yahoo Finance. Follow her on Twitter: @emily_mcck
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