The U.S. added 531,000 jobs to its labor force in October, a more positive sign that the long-struggle labor market is finally recovering from the recent pandemic-sparked slump in employment.
The Key Facts
According to Friday's data from the Labor Department, October's job growth was higher than economists expected (450,000) according to Labor Department data. Another encouraging sign for employment was the increase in growth estimates by the Labor Department for September and August, which combined 235,000 jobs. Although the unemployment rate was 4.6% in September, it was 4.8% in September. This is still a significant drop from its previous peak of 3.5%. The government reported that the US had a slightly lower number of people without jobs than expected, with 7.7 million Americans now unemployed, compared to 4.8% in September. However, this is still significantly higher than the 5 million who were unemployed in February 2020. In a Friday note, Mark Hamrick, an analyst at Bankrate, stated that the labor force participation rate (which measures the percentage of people who are actively looking for work or are employed) remained flat at 61.6%. This is likely due to the record-breaking number of people quitting their jobs.
Jay Pestrichelli, CEO of Zega Financial, a Florida-based investment firm, stated in an email Friday that the labor market has not returned to pre-Covid-19 levels but that it had made an impressive recovery over the past 18 months. He noted that hiring accelerated last month after Covid-19 cases dropped and restrictions were eased. "The September expiration of federal enhanced unemployment benefits may have encouraged more workers back into the workforce, which could have contributed to October's strength in the labor market."
Probably reflecting the decrease in Covid-19 cases last month, notable job gains occurred in industries most vulnerable to pandemic restrictions like leisure and hospitality and manufacturing and transportation.
Friday's better-than-expected job data is a welcome respite for the labor markets after recent data points that showed ongoing difficulties around employment. New job gains have fallen for the second consecutive month after July's addition of more than 1,000,000 jobs, each time falling below economist projections. Mark Zandi, chief economist at Moodys Analytics, stated that the delta variant of Covid-19 seems to have hampered the recovery in the job market. Experts are concerned that the economic recovery has been slowed by the resurgence of pandemics. The number of new unemployment claims has started to improve, even though they were higher than expected for three consecutive weeks in September.
At the height of pandemic uncertainty, April 2020, the unemployment rate reached a record high at 14.7%. About 80% of the 20.5 million jobs that U.S. employers had cut between March 2017 and April 2018 have been recovered by the U.S.
New Pandemic Low in Jobless Claims: 2.7 Million Americans Receive Unemployment Benefits (Forbes).
The U.S. Labor Market is at its worst month this year with 7.7 million Americans still unemployed (Forbes).