U.S. employers added 638000 jobs in October – Unemployment fell to 6.9 %

By guest author Nelson D. Schwartz from the New York Times

Graphics courtesy by the New York Times

The American economy gained 638000 jobs last month, a sign the labor market continues to heal slowly as a resurgence in the coronavirus threatens future growth.

The unemployment rate fell sharply to 6.9 %, from 7.9 % in September, the Labor Department reported.

The overall job gain would have been larger without the loss of 147000 temporary census positions.

The nation has recovered a little over half of the 22 million jobs lost after the pandemic struck in March, but the gains have softened in recent months. The economy added almost 1.8 million jobs in July and 1.5 million in August, but the figure fell to 672000 in September.

Among the big contributors to the October increase were two industries hit hard by the pandemic: food and drink establishments, which added 192,000 jobs, and retailing, which picked up 104000. But cooler temperatures and caution about shopping amid surging coronavirus cases threaten those gains.

“It’s better than expected, but we’re starting to see headwinds,” Diane Swonk, chief economist at the accounting firm Grant Thornton in Chicago, said of the October report. “The drop in the unemployment rate is welcome news, but there are still over 11 million unemployed workers.”

Even as the unemployment rate has come down, joblessness for many has become more prolonged. The Labor Department said the number of long-term unemployed — those without work for 27 weeks or more — grew to 3.6 million in October, an increase of 1.2 million.

Millions of unemployed workers have had a harder time paying bills since an emergency federal program paying USD 600 a week in additional benefits expired at the end of July. Another set of federal jobless benefits will last only through the end of the year.

The Economic Policy Institute, a left-leaning research group, estimates that more than 30 million workers have lost jobs or had their hours or pay reduced in the coronavirus-related downturn.

With the Senate remaining in Republican hands, as election returns suggest, any further relief will probably be more modest than the multitrillion-dollar package that seemed likely if a “blue wave” had given Democrats control of Congress and the White House. As a result, Carl Tannenbaum, chief economist at Northern Trust in Chicago, has cut his estimate of growth next year by a full percentage point.

“The good news is that the U.S. job market is healing,” Mr. Tannenbaum said. “But full recuperation may take awhile.”

Caption courtesy by New York Times

Two of the hardest-hit industries among American employers — retailing and leisure and hospitality — showed signs of life in October, even as threats gather in the form of new coronavirus outbreaks.

Retailers added 104000 jobs, the Bureau of Labor Statistics reported on Friday, while the leisure and hospitality field — including restaurants and hotels — gained 271000. But employment in both areas remains far below where it was before the pandemic struck, and there are doubts about the strength of the end-of-year shopping season that begins shortly.

Openings have been weaker than expected as retailers gear up for the holidays, according to Daniel Zhao, senior economist at Glassdoor, the jobs site. “This could point to more muted spending and hiring,” Mr. Zhao said.

At the same time, resurgent coronavirus cases threaten to further harm already weakened industries like restaurants, hotels and airlines.

Outdoor dining has provided a lifeline to restaurants unable to offer indoor service, but cooler temperatures will increasingly preclude that in much of the country. In some states, indoor dining is again permitted but customers remain wary.

For workers, the pain is particularly great as many of these jobs don’t pay much more than minimum wage, so they face being out of work with little savings. And for unemployed workers facing the end of their benefits, a retrenchment in these industries would foreclose any chance of being called back to work.

“We’re getting into a period which should be one of celebrations and travel for the holiday season,” said Diane Swonk, chief economist at the accounting firm Grant Thornton in Chicago. “That’s not going to happen.”