Hiring rebounds in October, with businesses adding 531,000 jobs
Job growth rebounded in October after two months of lackluster growth caused by the spread of the Delta variant. With COVID-19 cases slowing in many regions, hiring picked up last month as more people returned to the job market.
Employers added 531,000 jobs last month, the Labor Department said Friday. Economists had forecast about 450,000 jobs to be created. The nation's unemployment rate declined to 4.6%, from 4.8% in September, the lowest since March of 2020, when joblessness jumped to 4.4% after COVID-19 started to spread.
The rebound in hiring may also reflect the September expiration of the enhanced pandemic unemployment benefits, which may at last be pushing some workers to return to the job market, noted Goldman Sachs analysts. With COVID cases easing, more employers and workers are feeling confident about hiring and returning to work, analysts said.
"This is a really solid and strong report that gives us a sense of the underlying strength of this recovery without a surge in COVID cases," Nick Bunker, Indeed Hiring Lab director of research, told CBS MoneyWatch. "If we stay on this current trajectory, we are on a very good path."
Meanwhile, the number of Americans applying for first-time weekly unemployment benefits last week fell to its lowest level since the COVID-19 pandemic erupted in early 2020, the Labor Department said on Thursday.
Another notable point in Friday's jobs report was that job growth in August and September was stronger than earlier reported. Employers hired 312,000 workers in September and 483,000 in August — a combined 235,000 more jobs than previously reported, the Labor Department said. The government typically revises jobs data after receiving additional reports from businesses and government agencies.
Those revisions are an "optimistic sign," Bunker said. "The dip wasn't as large as we thought, but it shows we are on solid footing, and the pace of recovery can stay quite strong in the absence of a rise in COVID cases."
Wages rise with "the great renegotiation"
Workers are benefitting from wage gains given a shortage of hiring candidates, which is giving them an upper hand in wrangling higher pay, economists said. Since a year earlier, the typical hourly earnings have increased 4.9%, the Labor Department said on Friday.
"The 'great renegotiation' was on full display in October with average hourly earnings rising 0.4% month over month and wage growth accelerating from 4.6% to 4.9% year over year," wrote Oxford Economics chief U.S. economist Gregory Daco in a Friday morning report, playing on the term "The Great Resignation," denoting the higher numbers of workers who are quitting their jobs amid a tight labor market.
For production and nonsupervisory workers, the average hourly wage over the last 12 months has risen an even more robust 5.8%, while in the low-paid leisure and hospitality sector hourly pay has surged 12.4%, noted economist Dean Baker of the Center for Economic and Policy Research in a report.
The October rebounds signals that job growth may continue to improve, with Oxford Economics forecasting monthly hiring gains of between 400,000 to 600,000 into 2022. The nation should reach its pre-COVID level of employment in the second half of 2022, it added.
Widespread hiring
Job growth was spread throughout the economy, with businesses in industries ranging from restaurants to manufacturing hired more workers, the report said. Even so, employment in public education declined last month, although the Labor Department said such declines are "challenging to interpret" given the fluctuations in education staffing during the pandemic.
Despite the stronger-than-expected hiring, the labor force participation rate — or the share of adults who are currently working — was unchanged at 61.6% last month. That signals that labor force constraints may continue to weigh on employers.
Yet that pressure partly comes from demographic trends due to the aging baby boomer population. During the pandemic, many in that generation retired earlier than expected. But an encouraging note was that the share of people between 25 to 54 years old in the workforce rose 0.3 percentage points to 78.3%, signaling that younger workers are returning to work.
"I don't think this is the sort of report that should have us waving victory flags, but it makes me hopeful about where we will be in a year from now," Bunker said. "That in 2022 and 2023, if we keep the recovery going, we could be in a pretty enviable spot."