The U.S. economy added 531,000 jobs in October which was higher than consensus expectations of 450,000 and a welcome relief following last month's concerning figure. Even more impressive were upwards revisions for August and September which were weaker than expected and had increased concern that the recovery was stalling out.
Instead, this jobs report, in addition to other recent economic data, clearly shows that the economic expansion remains intact and that we simply had a "roadbump" due to the delta variant. Some other data supporting this conclusion is Q3 GDP falling to 2% growth but Q4 GDP expected to come in around 6%. There's also increasing optimism that Q3 may have been the "bottom" when it comes to supply chain challenges and logistics issues that have been hindering growth and contributing to inflation.
Inside the Numbers
In addition to the headline number, the unemployment rate fell to 4.3%, better than expectations and a new post-pandemic low. Of the gains, 604,000 came from private hiring which saw a drag from the loss of 73,000 government jobs. September's jobs number was revised higher to 312,000 from its initial 194,000. The August jobs figure was also revised higher by 117,000.
Another constructive data point was the labor force expanded with the strongest gains in the categories which saw the biggest drop including women between the ages of 25 to 54. However, the labor force participation rate remains at 61.6% which is 1.7% below pre-pandemic levels, equating to about 3 million less people in the workforce. Some reasons include early retirement, covid concerns, and people having difficulty finding caretakers for kids or elderly parents.
Wages increased 0.4% on a monthly basis, while they were higher by 4.9% on an annual basis. Given the sharp drop in coronavirus cases over the past month, it's not surprising that the leaders in job additions were sectors like leisure & hospitality, education, and professional services.
In addition to what it says about the economy, the report is also positive, because one of the biggest challenges of the recovery has been the difficulty of businesses to hire workers. And, this is adding to the economy's struggles to return to full capacity and also adding to inflationary pressures.