The employment picture brightened considerably in October as the economy added 531,000 jobs and unemployment dropped to a post-pandemic low of 4.7 percent. Numbers for August and September were also revised upward considerably with the 194,000 jobs first reported in September being revised to 312,000.
Wages were up a strong 0.4 percent making a total gain of 4.9 percent over the numbers from a year ago. But all of those wage gains were eaten up by the rising inflation rate.
Overall, it was an improved picture from October when it was believed that the supply chain problems might cause the economy to slide back into a recession. Those supply chain problems are still present and may be contributing to a slowing economy.
Concerns linger, though, that the U.S. economy is slowing. Gross domestic product increased just 2% in the summer months, falling short of even the reduced expectations for gains during the pandemic-era recovery.
Recent data, though, has shown a progressive drop in weekly jobless claims, the result in good part from enhanced unemployment benefits expiring. Data on Thursday showed productivity is running at a 40-year low and the trade deficit notched another record high, passing $80 billion for the first time.
The labor force participation rate held steady at 61.6%, still 1.7 percentage points below its February 2020 level before the pandemic began. That’s about 3 million fewer Americans considered part of the workforce and is reflective of ongoing worries about staffing levels.
“While the strength of employment was an encouraging sign that labor demand remains strong, labor supply remains very weak. The labor force rose by a muted 104,000, which is not even enough to even keep pace with population growth,” said Michael Pearce, senior U.S. economist at Capital Economics.
This is indicative of the fact that workers are still reluctant to either go back to their old job — if it still exists — or look for other employment opportunities, which by all reports are still plentiful.
The critical leisure and hospitality sector led the way, adding 164,000 as Americans ventured out to eating and drinking establishments and went on vacations again as Covid numbers fell during the month. For 2021, the sector has reclaimed 2.4 million positions lost during the pandemic.
Other sectors posting solid gains included professional and business services (100,000), manufacturing (60,000), and transportation and warehousing (54,000). Construction added 44,000 positions while health care was up 37,000 and retail added 35,000.
Another significant sign was that the number of “discouraged” workers fell from 8.5 percent to 8.3 percent. That could be a signal that workers currently sitting on the sidelines may be actively looking for jobs in the near future.
While the jobs picture is brightening, it really didn’t have anywhere to go but up, given the recent dismal performance of the economy. And the Biden agenda may end up being a further drag on economic growth going forward.
Democrats are breathing a small — very small — sigh of relief this morning. But they’re in for some sphincter-tightening moments as we approach the Christmas season with inflation raging, supply bottlenecks growing, and shortages looming.
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