U.S. employment increased in October; worker shortages persist

REUTERS/Octavio Jones

U.S. employment increased more than expected in October as the headwind from the surge in COVID-19 infections over the summer subsided, offering more evidence that economic activity was regaining momentum early in the fourth quarter.

The Labor Department’s closely watched employment report on Friday still showed, however, that worker shortages persisted even after federal government-funded unemployment benefits expired in early September and schools fully reopened. The labor force participation rate was flat.

Still, the broad-based gain in employment added to rising consumer confidence and services sector activity in painting a more favorable picture of the economy, after the Delta variant of the coronavirus and economy-wide shortages of goods restricted growth in the third quarter to its slowest pace in more than a year.

Nonfarm payrolls increased by 531,000 jobs last month, the survey of establishments showed. Data for September was revised higher to show 312,000 created instead of the previously reported 194,000. Economists polled by Reuters had forecast payrolls rising by 450,000 jobs.

Employment is 4.2 million jobs below its peak in February 2020. Job growth has averaged 582,000 per month this year.

Leisure and hospitality businesses led the increase in hiring last month, with 164,000 jobs created. Payrolls also rose in the professional and business services, transportation and warehousing, healthcare, wholesale trade, financial activities as well as mining sectors.

Manufacturing added 60,000 jobs, with 28,000 of the positions at motor vehicle manufacturers. Construction payrolls increased by 44,000 jobs.

But state and local government education shed 65,000 jobs. The government said pandemic-related staffing fluctuations in education have distorted normal seasonal patterns, making the changes in employment in the sector challenging to interpret. Shortages of bus drivers and other support staff have been well documented. Overall government payrolls fell by 73,000 jobs.


Details of the smaller survey of households were also upbeat, with strong employment gains. The unemployment rate fell to 4.6% last month from 4.8% in September. Though 104,000 people entered the labor force last month, millions remained outside, making it harder for employers to fill 10.4 million jobs which were open as of the end of August.

The labor force participation rate, or the proportion of working-age Americans who have a job or are looking for one was unchanged at 61.6%. It has remained within a narrow range of

61.4% to 61.7% since June 2020. About five million people have left the labor force since the pandemic started.

The number of people unemployed for 27 weeks or more dropped 357,000 to 2.3 million. They accounted for 31.6% of the 7.4 million people officially unemployed last month.

The labor market disconnect has been blamed on caregiving needs during the pandemic, fears of contracting the coronavirus, early retirements, massive savings and career changes as well as an aging population and the recently ended expanded unemployment benefits. With many people who moved out of cities during the pandemic yet to return, there could also be a mismatch between the open jobs and location.


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