November 6, 2020 – Employment rose by 668,000 in October as the U.S. unemployment rate fell to 6.9 percent, according to the most recent U.S. Bureau of Labor Statistics report released this morning. That’s down from a peak of 14.7 percent in April, but still far above the 3.5 percent rate in February before the coronavirus pandemic led to mass economic shutdowns across the country.
Economists and officials have also now focused more closely on the Labor Department’s data on “permanent job losers,” or those who do not expect to be called back from temporary layoffs, as a warning sign of the longer-term impacts of the pandemic on the labor market. In October, the number of permanent job losers stands at 3.9 million.
“The 638,000 rise in non-farm payrolls in October is stronger than it looks as it included a 147,000 drop in temporary census employment and, alongside the big fall in the unemployment rate, it suggests that the labor market recovery still has plenty of momentum,” said Andrew Hunter, senior U.S. economist for Capital Economics, said in a note Friday morning.
“The slowdown in hiring in leisure and hospitality might be an early sign that virus concerns were starting to weigh on the sector but, at 271,000 last month, hiring remains much stronger than it was back in August,” Mr. Hunter said. “In any case, that was offset by larger gains in retail, construction and professional & business services payrolls.”
In a statement after its latest monetary policymaking meeting on Thursday, the Federal Reserve reiterated that “the ongoing public health crisis will continue to weigh on economic activity, employment, and inflation in the near term, and poses considerable risks to the economic outlook over the medium term.”
Where Job Growth Occurred
- Employment in leisure and hospitality increased by 271,000 in October, with gains in food services and drinking places (+192,000); arts, entertainment, and recreation (+44,000); and accommodation (+34,000). Leisure and hospitality has added 4.8 million jobs since April, but employment in the industry is down by 3.5 million since February.
- Professional and business services added 208,000 jobs in October, with temporary help services (+109,000) accounting for about half of the gain. Employment also increased in services to buildings and dwellings (+19,000), computer systems design and related services (+16,000), and management and technical consulting services (+15,000). Employment in professional and business services is 1.1 million below its February level.
- In October, retail trade added 104,000 jobs, with almost one-third of the gain in electronics and appliance stores (+31,000). Employment also rose in motor vehicle and parts dealers (+23,000), furniture and home furnishings stores (+14,000), clothing and clothing accessories stores (+13,000), general merchandise stores (+10,000), and non-store retailers (+9,000). Employment in retail trade has risen by 1.9 million since April but is 499,000 below its February level.
- Construction added 84,000 jobs in October. Specialty trade contractors added jobs, both in the nonresidential (+28,000) and residential (+18,000) components. Employment also rose in heavy and civil engineering construction and in construction of buildings (+19,000 each). Construction has added 789,000 jobs in the last six months, but employment is down by 294,000 since February.
- Employment in healthcare and social assistance rose by 79,000 in October but is down by 950,000 since February. In October, healthcare employment increased by 58,000, with the largest gains occurring in hospitals (+16,000), offices of physicians (+14,000), offices of dentists (+11,000), and outpatient care centers (+10,000). These increases were partially offset by a decline of 9,000 in nursing and residential care facilities. Social assistance added 21,000 jobs over the month.
- Employment in transportation and warehousing increased by 63,000 in October, with gains occurring in warehousing and storage (+28,000), transit and ground passenger transportation (+25,000), and truck transportation (+10,000). By contrast, air transportation shed 18,000 jobs. Employment in transportation and warehousing is 271,000 below its February level.
- The other services industry added 47,000 jobs in October, with gains occurring in personal and laundry services (+27,000) and in repair and maintenance (+18,000). Employment in other services is 436,000 below its February level.
Continued Jobless Claims Make Full Jobs Recovery a Distant Aim
The Labor Department reported this morning that 751,000 more Americans filed new claims for state unemployment benefits last week. Economists surveyed by Dow Jones had been expecting 741,000. This was the third straight week that claims were below 800,000. “The persistently high level underscores the notion that a full labor-market recovery is a long way off as the pandemic continues to force layoffs,” Bloomberg economist Eliza Winger said in a commentary.
- Manufacturing employment rose by 38,000 in October but is 621,000 lower than in February. Gains occurred in fabricated metal products (+7,000), primary metals (+6,000), and wood products (+4,000).
- Employment continued to trend up in food manufacturing (+6,000) and in plastics and rubber products (+4,000). Employment in financial activities rose by 31,000 in October but is 129,000 lower than in February. Over-the-month job gains occurred in finance and insurance (+17,000) and real estate (+10,000).
- In October, government employment fell by 268,000. A decrease of 138,000 in federal government was driven by a loss of 147,000 temporary 2020 census workers. Job losses also occurred in local government education and state government education (-98,000 and -61,000, respectively).
- Employment in other major industries, including mining, wholesale trade, and information, changed little in October.
Veteran Search Consultants Weigh In
“We are seeing a noticeable increase in search work from clients that have been with us for many years,” said Doug Miller, president of Sales Search International. “What is most encouraging is we are seeing an uptick in net new clients that we have not worked with in the past. We didn’t really expect that but we’ll take it. Apparently, a lot of firms in our niche, which is software sales, closed or switched lanes during the pandemic.”
The new unemployment stats are encouraging, he noted, “but in our world they are somewhat irrelevant as the top performing sales reps are rarely affected,” Mr. Miller said. “The best and brightest always figure out how to make their quotas regardless of market conditions.”
Although the October jobs reports show a modest increase in employment across all sectors, “overall job growth has continued to slow and women are still being disproportionately impacted by the effects of the coronavirus on the labor market,” said Rebecca Henderson, CEO of Randstad Global Businesses. “It is imperative that the next administration support women who are being forced to choose between their careers and caring for their children as the loss of women from the labor force could have a $1 trillion impact on the global economy. This is especially important as the pandemic continues to impact women who work in particularly vulnerable industries, like the restaurant, hospitality and service sectors.”
Contributed by Scott A. Scanlon, Editor-in-Chief; Dale M. Zupsansky, Managing Editor; and Stephen Sawicki, Managing Editor – Hunt Scanlon Media