The economy added 531,000 jobs to its ranks in October. The unemployment rate dropped to 4.6 percent in October, which was a level that was not possible after the Great Recession. This level was not reached until February 2017. The employment numbers for the two previous months were also revised upwards by 235,000, bringing the three-month average to 442,000.
It’s also worth noting that private sector employment grew even more rapidly, adding 604,000 jobs. The hours-worked index measures private sector employment and has increased by 1.2 percent over the past three months. This would translate to 498,000 private sector jobs per year if there was no change in hours. Many employers are increasing the hours they work to fill the vacancies.
For most groups, unemployment falls
Analysts had predicted a much larger drop in unemployment rates, especially after September’s 0.4 percentage point decrease. It has dropped by 1.3 percentage point since June. The lowest educated saw the greatest drop in unemployment, with the rate falling by 0.5 percent for those without a high-school degree to 7.4 percentage points and 0.4 percent for those with a high-school degree to 5.4 percentage percent. The unemployment rate among college grads fell by 0.1 percentage points, to 2.4percent. This is 0.3 points below its pre-pandemic peak.
The unemployment rate was 7.9 percent for Blacks and 4.2 percent respectively, which was the same as in 2008. It fell by 0.4 percentage point to 5.9 percent in Hispanics.
Wage Growth Remains Strong
We continue to witness strong wage growth, particularly for low-paid workers. The average hourly wages for nonsupervisory and production workers has increased by 5.8% year-over-year. It has risen 12.4 per cent in the low-paid hospitality and leisure sector. Wage growth is slowing in the leisure- and hospitality sector. The annual rate for the past three months (August-September-October) was 9.7 percent compared to the previous three months (May-June, July), although it increased slightly for production workers to 6.6 percent.
Strong growth in manufacturing and construction again
After a September gain of 31,000, the manufacturing sector saw a 60,000-job increase. After adding 30,000 jobs in September, construction added 44,000 jobs. Both sectors are now down 2.1 and 2.0% from pre-pandemic levels. This compares with a decline of 2.5 percent in the entire private sector. This is a change from the normal pattern, where these sectors are most affected by a recession.
Strong Job Growth in Hard-Hit Service Industries
In October, most of the hardest hit industries saw good job growth. Although air transportation has added 9,200 jobs, it is still down 9.7 per cent from its pre-pandemic peak. Motion picture industry added 11,300 new jobs, and is currently down 20.9 percent. The temp sector added 41.100 jobs, while arts & entertainment added 20,900 jobs. They are now down by 5.9 percent and 11.4%, respectively, from their pre-pandemic levels. There were 23,200 new jobs at hotels, and 119,400 at restaurants. These numbers are 14.9 percent, and 6.4%, respectively, below their pre-pandemic levels.
While 11,800 new jobs were created in nursing homes, employment is still 14.2 percentage below pre-pandemic levels. Only 700 child care facilities added jobs in October, which leaves employment at 10.1 percent below prepandemic levels. This corresponds to a drop of around 10 percent in child slots. This means parents with young children will have more difficulty finding care if they wish to work.
65,000 Jobs in State and Local Education
This sector continues losing jobs, even though there are children in school everywhere. This could reflect difficulty in hiring, as governments often can’t raise wages as rapidly as in the private sector. The sectors’ employment is down 7.9 percent compared to pre-pandemic levels.
The number of self-employed unincorporated workers has increased by 24,000
The October figure was 643,000, which is 7.3% higher than the 2019 average. This is likely due to people who are taking advantage of this pandemic to change their career paths.
Falling share of Long-Term Unemployed
The September share of long-term (over 26 weeks) unemployed fell to 31.6 per cent. It is still significantly higher than normal levels, which would have been below 20 percent.
The October Report is Solidly Positive
This report has a lot to love. Both surveys show a positive overall picture. If we can maintain this rate of growth, we will be able to recover the jobs lost due to the pandemic by next year. The unemployment rate is already below many economists’ estimates of Non-Accelerating Inflation Rate of Unemployment (NAIRU). Workers have greater freedom to change jobs today than ever before.