According to the Labor Department, October saw the U.S. job market rebound. Nonfarm payrolls increased more than expected, while the unemployment rate dropped to 4.6%. Nonfarm payrolls grew by 531,000 in October, compared with the Dow Jones estimate that 450,000. It was expected that the unemployment rate would fall to 4.7%. The headline unemployment rate was even lower for private payrolls, which rose 604,000 after a 73,000 job loss by the government. The October gains were a sharp increase from September's 312,000 jobs. This was despite Friday's significant upward revision to the Bureau of Labor Statistics' initial estimate of 194,000.
These numbers dispelled concerns about rising inflation, a severe shortage of labor force and slowing economic growth threatening to slow down job creation. "This is the kinda recovery we can achieve when we're not hindered by a surge of Covid cases," Nick Bunker, economic researcher at Indeed, said. We are on a solid track if this is the kind of job growth that we will see over the next few months. As Covid numbers dropped, the critical leisure and hospitality industry led the way with 164,000 additional jobs. The sector has recovered 2.4 million jobs that were lost in the pandemic. Other sectors that saw solid gains were professional and business services (100,00), manufacturing (60,00), and transportation and warehouse (54,000). Construction saw 44,000 new jobs, while retail saw 37,000 more. The month's wage increase was 0.4%, according to estimates. However, the annual 4.9% increase in wages was due to inflationary pressures which have increased throughout the year. The average workweek fell by one-tenth to 34.7 hours. The labor force participation rate remained steady at 61.6%, which is still 1.7 percentage points lower than its February 2020 level prior to the pandemic declaration. This resulted in a drop in the unemployment rate. This is a sign of continuing supply worries as it means that just under 3 million Americans are considered to be part of the workforce. The strength of employment was a positive sign that labor demand is still strong. However, the labor supply remains extremely weak. According to Michael Pearce (senior economist in the United States at Capital Economics), the labor force grew by just 104,000. This is barely enough to keep up with population growth.