The latest jobs numbers are out from the U.S. Bureau of Labor Statistics. What do they mean for job seekers, employers and investors? Here’s a quick take from Glassdoor Senior Economist Daniel Zhao.
Today’s jobs report shows the labor market recovery reaccelerated in October, adding 531,000 jobs, beating expectations and improving over the 312,000 jobs added in September. The unemployment rate fell to 4.6 percent from 4.8 percent, declining for the fourth straight month. As the Delta variant wave receded in October, the improvement in the public health situation unlocked reacceleration in the recovery.
Payroll Growth Rebounds to 531,000 in October
Payroll growth improved to 531,000 in October, after 312,000 jobs added in September and 483,000 in August. Jobs growth was also revised upward from 194,000 in September and 366,000 in August based on last month’s report. While payroll growth is not back to summer levels, the improvement is a healthy acceleration in the recovery. And while COVID-19 cases have fallen since September, they are still elevated, which suggests jobs growth in October was still being held back by the pandemic, opening up the possibility of faster growth in the late fall if the public health situation continues to improve.
Leisure & hospitality hiring rebounded to 164,000 in October, after adding 88,000 jobs in August. The industry actually grew on a non-seasonally adjusted basis as food service hiring overwhelmed normal seasonal stagnation in the fall. Manufacturing added 60,000 jobs and construction added 44,000 jobs despite supply chain disruptions in a sign of strength for goods-producing sectors which jumped by 108,000 jobs in total.
Unemployment Drops to 4.6 Percent
The unemployment rate fell to 4.6 percent in October, the fourth straight month of declines and a modest improvement from 4.8 percent in September. The unemployment rate fell for the right reasons as the labor force level improved marginally by 104,000 though the labor force participation rate was unchanged.
Seasonal Adjustment Overstates Education Job Losses in October
In October, education payrolls (including state/local government education, educational services and child day care services) fell by 47,200 on a seasonally adjusted basis. This is due to smaller-than-expected hiring at the start of the school year, but that expectation is based in part on seasonal patterns from before COVID-19. Due to leaner school workforces, these seasonally adjusted losses are likely overstated. Similarly, in October last year, we saw the same pattern with 166,200 seasonally adjusted job losses which were washed out by the seasonal adjustment later in the year.
Pay Growth Cools, But Still Hot in Leisure & Hospitality, Transportation & Warehousing
Average hourly earnings overall were up 4.9 percent year-over-year. Average hourly earnings for production & non-supervisory workers grew by 12.4 percent for leisure & hospitality and 8.2 percent in transportation & warehousing as acute labor shortages continue to force employers to offer higher wages. Despite the slowdown from the Delta variant in August and September, demand still remains high enough to push wage growth higher.
Recovery in the Coming Months
As Delta abates, the labor market recovery reaccelerates. The October jobs report is a step in the right direction, indicating that the improving public health situation is unlocking faster jobs growth. As the latest wave continues to recede, there’s room for faster growth in the coming months, especially as vaccinations climb with the expansion of eligibility to children and the new federal vaccine mandate takes effect. The October jobs report shows a labor market warming up and poised for a solid winter.
Payroll growth improved to 531,000 in October. The upward revisions to August and September payroll growth indicate that the Delta slowdown was not as severe as originally thought, but regardless, the labor market is warming up.
The picture is even rosier for private payrolls where growth hit 604,000. Government payrolls subtracted 73,000. More specifically, state & local government education was a drag, subtracting 64,900 jobs, but this is largely due to the seasonal adjustment.
We’re seeing a similar pattern to what we saw last fall in 2020. Education workforces are smaller than they were before the pandemic so the start of the school year doesn’t have as large a hiring bump. The seasonally adjusted job losses in the fall will likely get made up in the spring, like we saw in spring 2021.
Payrolls are down 4.2 million from pre-crisis levels, or 2.7 percent down. The economic impacts of the crisis have been particularly sharp, but we’ve made significant progress since April 2020.
The rebound in leisure and hospitality jobs growth was a big factor in October’s beat. Goods-producing sectors also gained: manufacturing (+60,000) and construction (+44,000) despite supply chain disruptions.
The rebound in leisure and hospitality is all the more impressive because it’s coming in spite of normal seasonal headwinds. Hiring in the industry normally slows in the fall. This goes to show that demand for workers is still red hot.
Leisure & hospitality and education are particularly important because these are two of the industries with the largest jobs shortfalls compared to pre-pandemic levels. Interestingly, transportation & warehousing has exceeded pre-pandemic job levels due to the boom in demand for e-commerce.
When looking at annualized average hourly earnings growth over the last 3 months compared to the 3 months prior, wage growth is simmering down in sectors like transportation & warehousing and leisure & hospitality, though wage growth overall is still strong.
The unemployment rate dropped to 4.6 percent in October—the fourth straight month of declines. Labor force participation was unchanged at 61.6 percent off of a small increase in the labor force of 104,000.
The Black unemployment rate stagnated in October at 7.9 percent, off of a decrease in the labor force and in employment. The Black unemployment rate is nearly twice the white unemployment rate, a threshold that could be reached as soon as next month.
The retail holiday hiring season is off to a big start with 218,000 jobs added, non-seasonally adjusted, larger than what we used to see pre-crisis. Retailers are starting holiday hiring early this year as they worry about labor shortages.
Remote work (due to the pandemic) is declining as the Delta wave recedes, now down to 11.6 percent of workers.
Access to remote or hybrid work options varies significantly by occupation. For computer & mathematical occupations, remote or hybrid work due to Covid is still at 42.8 percent, over three times the national average.