US added 531K jobs in October as hiring rebounded amid labor shortage
The US added 531,000 jobs last month, beating expectations amid economic pressures from the labor shortage and supply-chain constraints, the feds said Friday.
October’s numbers topped economists’ expectations of 450,000 jobs added, and comes as welcome news after the country added a disappointing 312,000 jobs in September, according to revised figures released Friday.
September’s jobs report was revised upward from 194,000 and August’s report was revised up to 483,000, from 366,000.
At the same time, the unemployment rate dropped more than expected to 4.6 percent in October — the lowest since February 2020 and down from 4.8 percent in September— according to Friday’s highly anticipated jobs report from the Bureau of Labor Statistics.
However, that’s still far higher than the 50-year low of 3.5 percent reported in February of last year, before the pandemic gutted the economy.Still, economists surveyed by Dow Jones had expected to see the unemployment rate tick down to 4.7 percent.
“Today is another great day for our economic recovery. America is getting back to work. Our economy is starting to work for more Americans,” President Joe Biden said later Friday.
“Our economy is on the move.”
Biden urged Americans to continue to get vaccinated to keep the coronavirus at bay and ensure the economy continues to recover. He also urged Congress to pass his $1.75 trillion social spending bill, which he claimed would help address long-term inflation.
But the commander-in-chief also noted that the economy still has a ways to go before its back at pre-pandemic levels.
Peter Essele, head of portfolio management for Commonwealth Financial Network, attributed the strong uptick in hiring to “the trifecta of waning COVID concerns, back-to-school season, and declining unemployment benefits.”
“Notable increases came from goods-producing industries like construction and manufacturing, a sign that the recovery is permeating industries beyond the work-from-home segments of the economy,” he said.
“Transportation and trade also experienced strong gains, which could help supply-chain bottlenecks ahead of the holiday shopping season. All in all, the jobs numbers should be seen as a possible development, particularly as the economy continues to wean itself off fiscal and monetary stimulus.”
He called the news “affirmation that the economy is on the right footing.”
The hard-hit leisure and hospitality sector, which has led the jobs recovery this year with gains of 350,000 per month in the first half of the year, added 164,000 jobs after picking up about 74,000 jobs in September.
Professional and business services created 100,000 jobs in October after adding 60,000 new jobs in the month prior, the feds said.
Transportation and warehousing hired 54,000 people in October and the industry’s jobs are now 149,000 above its pre-pandemic, February 2020 level, according to the federal report.
The retail sector added 35,000 jobs, the feds said, while jobs in local and state government education dropped by a combined 65,000.
The feds noted that “pandemic-related staffing fluctuations have distorted the normal seasonal hiring and layoff patterns” when it comes to the education industry.
Notably, the manufacturing sector posted strong gains of 60,000, “led by a gain in motor vehicles and parts,” which added 28,000 jobs despite the global shortage of semiconductor chips holding back production in the autos industry.
As hiring picked up, average hourly wages rose 0.4 percent from September and are now up 4.9 percent from a year ago.
Stocks climbed after the report, with the Dow Jones Industrial Average opening more than 200 points higher.
“Markets are cheering a much better than expected jobs report this morning as nonfarm payrolls smashed expectations,” said Cliff Hodge, chief investment officer for Cornerstone Wealth.
“Gains were broad-based across industries, and manufacturing was a real bright spot.”
He added, however, that the labor force participation rate, which remained largely unchanged, is still a worrying sign.
“What’s keeping so many people from coming back into the labor force now we’re seeing trends in covid cases falling, and the advances of treatments and therapeutics? It’s a bit of a mystery,” he said.
Friday’s report comes after a separate release from the Labor Department showed Thursday that the number of Americans newly seeking jobless benefits dropped again last week, inching closer to pre-pandemic levels amid the historically tight labor market.
The recovery in the labor market stalled out this summer amid a surge in COVID-19 cases fueled by the highly contagious Delta variant. Economists say that child-care concerns, especially with schools out for the summer, likely also kept would-be employees at home.
But now, with schools back and the surge in COVID cases subsiding, economists expect to see the recovery in the job market march forward this fall — barring another flare-up in COVID cases.
Companies appear eager to hire across the board, though employees are more willing to quit their jobs than ever before, according to federal data.
There were more than 10.4 million unfilled jobs at the end of August, a drop from July but still near an all-time record, the Labor Department’s data shows. At the same time, 4.3 million workers left their jobs, more than ever before, according to the data.
And employers, meanwhile, have been complaining that the nationwide labor shortage is holding them back from producing and delivering goods.
Despite concerns over the recovery of the labor market and supply-chain issues holding back sales, officials at the Federal Reserve have voiced optimism about the state of the economy.
Federal Reserve Chairman Jay Powell said Wednesday that the economy is now strong enough to begin tapering the Fed’s bond-buying program that’s given stocks a lift throughout the pandemic.
At the same time, Powell said the Fed is still leaving interest rates near zero — even as inflation stays stubbornly high — emphasizing that he still thinks rising prices will abate as supply chain kinks are worked out.
