Employers added 531000 jobs in October, a big improvement from the previous month and a sign of optimism as the latest coronavirus surge eases.
By guest authors Nelson D. Schwartz and Talmon Joseph Smith from the New York Times. Nelson D. Schwartz has covered economics since 2012. Previously, he wrote about Wall Street and banking, and also served as European economic correspondent in Paris. He joined The Times in 2007 as a feature writer for the Sunday Business section. Talmon Joseph Smith is an economics reporter for The New York Times based in New York.
The American economy is showing renewed signs of life, with employers hiring workers in greater numbers than they have in months.
The Labor Department reported Friday that payrolls in October jumped by 531,000, the best showing since July. The gains were reflected in a broad variety of fields, led by restaurants and bars, as well as factories, offices and warehouses.
The improvements followed a late-summer lull caused by the latest coronavirus surge and by supply chain problems that have delayed shipments, hampered manufacturers and left gaps on supermarket shelves.
Business leaders and economists said October’s data pointed to faster growth in the final months of the year, especially with shoppers feeling bullish as the holiday season approaches.
“The world is normalizing,” said Brian Moynihan, the chief executive of Bank of America. “We’re winning the war on the virus in Europe and North America, knock on wood. Consumers are spending a lot of money, and people are traveling, going to hotels and taking vacations.”
The report also provided a brighter picture of earlier months. Hiring figures for August and September were revised upward by 235,000, bringing the three-month average for job growth to 442000.
The latest data was welcome news for the Biden administration, which is struggling to win congressional approval of its legislative agenda and endured a disappointing showing by Democrats in elections on Tuesday, November 2, 2021.
“Our economy is on the move,” President Biden declared Friday.
On Thursday, the administration set a Jan. 4 deadline for large companies to mandate coronavirus vaccinations or start weekly tests for workers. Administration officials hope the requirements will foster hiring because workers will be less afraid of contracting the coronavirus.
There are signs that anxiety about the pandemic is easing. Last month, the share of employed people who worked remotely at some point because of the virus fell to 11.6 % – the lowest level since the pandemic struck – from 13.2 % in September.
The unemployment rate fell to 4.6 % from 4.8 %.
“This was a strong employment report that shows the resilience of the labour market recovery from the pandemic,” said Scott Anderson, the chief economist at Bank of the West in San Francisco. “I think we will see a pretty strong bounce back in economic growth in the fourth quarter.”
While the report was overwhelmingly positive, millions of working-age Americans remain on the sidelines despite the improving economy and employers’ complaints of a shortage of workers. The labor force participation rate — the share of working-age people who have a job or are looking for one — was unchanged last month at 61.6 %, disappointing hopes that a tighter job market would lure people back to work. Among those in their prime working years — ages 25 to 54 – the rate rose slightly, to 81.7 % in October from 81.6 % in September, but was still far short of the prepandemic level.
The stubbornly low participation rate underscores the pandemic’s economic damage and why it will take time to recover despite strong months like October. Total employment is 4.2 million below — and the unemployment rate remains more than a full pervcentage point above — where it was in February 2020.
Federal Reserve officials initially hoped that the labor market could return to the participation and employment levels that prevailed before the health crisis. The Fed still sees room for improvement, but officials concede that they may have to adjust their expectations.
“The temptation at the beginning of the recovery was to look at the data in February of 2020 and say, ‘well, that’s the goal,’” Jerome H. Powell, the Fed chair, noted during a news conference this week when asked about what constituted full employment.
“I think there’s room for a whole lot of humility here as we try to think about what maximum employment would be,” he later added.
So far, those effects have not matched some analysts’ expectations. Health concerns and child care difficulties have been an impediment, and a surprising number of older workers have decided to retire early.
“For the last 25, maybe 30 years, labour has been on its back heels and losing its share of the economic pie,” said Mark Zandi, the chief economist at Moody’s Analytics. “But that dynamic is now shifting.”
One reflection is in wages, which were up 4.9 % in October from a year earlier.
“Not only are more Americans working, working Americans are seeing their paychecks go up,” Mr. Biden said Friday.
At Bank of America, minimum starting pay has risen to USD 21 an hour from USD 19 an hour over the last 24 months, said Mr. Moynihan, the chief executive. “Wage growth has been accelerating,” he added. “We’re fighting to get those jobs filled and our clients are telling us the same thing.
Beyond finding workers, the supply chain troubles — reflecting the challenge of re-establishing global shipping networks — remain a headache for employers. Automobile manufacturers have been particularly hurt by a shortage of semiconductors, while many companies have been dealing with rising prices for raw materials and transportation.The rising compensation has also fuelled fears of inflation, however, at a time when climbing prices are already diluting the buying power of those gains.
The Commerce Department reported last week that the economy grew by 0.5 % in the third quarter compared with the prior three months, slower than the 1.6 % growth in the second quarter. Economists attributed the deceleration to the resurgent pandemic and the supply holdups.
Still, there are reasons to be optimistic. Forecasts suggest growth in the fourth quarter of the year will be better. The Federal Reserve said Wednesday that it would begin winding down the large-scale bond purchases that have been underway since the pandemic struck, signalling that it considers the economy healthy enough to be weaned from the extra stimulus.
The job picture also improved across most demographic groups. The unemployment rate ticked downward for Hispanic and Asian workers, women, and those without a college degree. But Black unemployment was flat at 7.9 %, nearly twice the rate for white workers.
That racial gap is likely to present a serious test of the Fed’s fresh emphasis on balancing its mandate to control inflation with the goal of “broad-based and inclusive” maximum employment, as officials call it.
“It’s a euphemism, but something the Fed takes very seriously,” said Diane Swonk, the chief economist at the accounting firm Grant Thornton. If the current surge in prices does not abate by early next year, and if both internal and external pressure to prioritize price stability takes precedence, then “patience may run out sooner than people think,” she said — and sooner than Mr. Powell, the Fed chair, would like.
Hiring has seesawed this year along with the pandemic, especially in vulnerable sectors like hospitality and retail, where workers must be face-to-face with customers. Because many white-collar employees can work remotely, they have consistently fared better.
In October, leisure and hospitality employment rose by 164000, while professional and business services added 100000 jobs. Despite the supply chain shortages, manufacturers hired 60000 workers, and transportation and warehousing saw a jump of 54000.
“We are optimistic,” said Lou Rassey, the co-founder and chief executive of Fast Radius, a Chicago-based company that develops software for manufacturers and makes components for items like medical devices and electric vehicles.
Fast Radius brought aboard about 25 people last month, including factory workers, software developers and technologists. It has actually benefited from the knots in global supply chains. In view of all the trouble that can arise when one link in a chain goes haywire, some U.S.-based industrial customers are moving production closer to home.
“We can produce parts locally that traditionally were made halfway around the world,” Mr. Rassey said.
Jeanna Smialek, Zolan Kanno-Youngs and Ben Casselman contributed reporting.