The latest jobs report from the Labor Department was welcome news after several months of lackluster jobs numbers. October added the most jobs since July, and the unemployment rate hit a new pandemic low. The worst of the COVID-19 Delta surge is now behind us, and the job market recovery is getting back on track.JobGet Unemployment Report Oct v2-converted (2)
October saw a gain of 531,000 jobs, higher than the forecasted 450,000, and the most in several months. Additionally, the BLS revised August and September’s jobs gains up by a total of 235,000 jobs. COVID-19 cases and hospitalizations are down in most of the country, and pandemic-related restrictions are again easing.
The unemployment rate fell again in October, to a new pandemic low of 4.6%. Hiring in Leisure and Hospitality accounted for 31% of the job growth as the pandemic-battered sector added 164,000 jobs, a significant increase from the previous month. Professional and Business Services and Manufacturing also saw large job gains. Average wages continued to rise, and are now 4.9% higher than a year ago. But even this strong wage growth cannot keep up with price increases. Inflation is now at a 30-year high, with prices 6.2% higher than a year ago.
Even as the economy adds jobs and the unemployment rate ticks down, many workers are still on the sidelines. The labor force participation rate was unchanged from last month and remains several percentage points below pre-pandemic levels. However, the prime-age employment-to-population ratio increased again in October. If this trend continues, it will return to pre-pandemic levels by next Fall.
The total number of unemployed individuals fell from 7.7 million in September to 7.4 million in October, while the number of people on temporary layoff and permanent job losers decreased only slightly from the previous month. Both the number of people unemployed for less than 5 weeks (short-term unemployed) and more than 26 weeks (long-term unemployed) dropped. Long-term unemployed people now account for 31.6% of all unemployed, much lower than the 42% we saw in the summer of 2020. Median unemployment duration fell for the fourth straight month, from 13.3 weeks in September to 12 weeks in October.
The overall unemployment rate dropped from 4.8% to 4.6%. While the unemployment rate for men dropped in October, the unemployment rate for most demographic groups showed little or no change. Women’s unemployment rate increased slightly, from 4.2% to 4.4%. The White unemployment rate dropped from 4.2% in September to 4% in October, while the Black and Asian unemployment rates were unchanged at 7.9% and 4.2%, respectively. Hispanics saw a slight drop in their unemployment rate, from 6.3% to 5.9%. The teen unemployment rate ticked up to 11.9% from 11.5% in September.
When broken down by occupation, unemployment rates are lower than a year ago, often significantly, for nearly every occupation category. Among service, sales & office, natural resources, construction and maintenance, and transportation and material moving occupations, unemployment rates are 2 to over 4 percentage points lower when compared to October 2020. Unemployment rates for these occupation categories also all declined from September to October.
After modest job growth in September, Leisure and Hospitality added 164,000 jobs in October, 73% of which are in the food services and drinking places subsector. With a significant share of jobs requiring face-to-face interactions, the Leisure and Hospitality industry is particularly vulnerable to surges in COVID-19 cases. The receding of the Delta wave has allowed recovery in the hard-hit industry to resume.
Professional and Business Services and Manufacturing also saw significant employment gains in October, adding a total of 160,000 jobs. Employment in Transportation and Warehousing went up by 54,400 jobs, Health Care and Social Assistance saw an employment increase of 46,900 jobs, and Construction gained 44,000 jobs last month. Government employment declined again, by 73,000 jobs.
Average hourly wages increased by 0.36% or 4.9% on a year-over-year basis. This is a sizable increase but below the inflation rate (prices are up by 6.2% from a year ago), meaning that real wages actually fell in October. Transportation and Warehousing wages grew by $0.26/hour and Leisure and Hospitality wages increased by $0.18/hour, the largest wage gains for the month when broken down by industry.
Consumer prices, as measured by the Consumer Price Index (CPI), climbed by 0.9% in October, and are 6.2% higher than a year ago. This is the fastest prices have risen since 1990. Even excluding volatile food and energy prices, the gain was 0.6% on a monthly basis. Pandemic-induced supply shortages and supply chain disruptions as well as strong consumer demand continue to put upward pressure on prices.
While wage growth has been strong, it is not enough to keep up with price increases. At 0.4%, average hourly wages increased by less than inflation, meaning that real wages fell in October. It is expected that prices will stabilize in the next year or so.
October’s job gains of 531,000 were accompanied by a tepid gain of 104,000 workers to the labor force, not enough to keep up with population growth. The labor force participation rate remained unchanged from last month at 61.6% as many workers remain on the sidelines. As the overall labor force participation rate was unchanged, the prime age (25 to 54) employment-to-population ratio increased from 78% in September to 78.3% in October. If this trend continues, the prime-age employment-to-population ratio will return to pre-pandemic levels by next Fall. This is a promising sign but hinges on getting the pandemic behind us.
When broken down by gender, men’s labor force participation rate ticked down to 67.6%, and women’s labor force participation rate inched up to 56%. Over half of October’s job gains went to women, and 251,000 women over 20 re-entered the labor force. This follows September’s decline in over-20 female employment of 309,000 and are promising signs of female job recovery.
Women, who are disproportionately employed in some of the hardest-hit sectors of the pandemic, such as Leisure and Hospitality, have borne the brunt of pandemic job loss. Before the pandemic, women held the majority of nonfarm payroll jobs. Now nonfarm female employment is 2.4 million lower than February 2020 levels while male nonfarm employment is down 1.8 million.
The U.S. job market recovery appears to be back on track following several months of weak job growth due to the COVID-19 Delta surge. The economy added 531,000 jobs, and the unemployment rate hit a new pandemic low of 4.6%. These last few months have made clear that we need to get the pandemic under control in order to fully recover. Barring a winter surge in COVID cases, the holiday season should continue to bring positive job market news.
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