The Labor Market Regains Strength in October
US Job Market Comes Back
The US job market came roaring back in October, as declining COVID-19 cases drove more people back to work. Nonfarm payrolls in October rose to 531,000 topping economists’ forecast for 450,000 job gains during the month. The unemployment rate dropped to 4.6%, which was also better than the 4.7% economists were expecting. Excluding government jobs, private payrolls increased by 604,000.
At the same time, the average hourly earnings of workers in the private sector increased 4.9% in October compared to a year earlier. This also marks an increase from previous months. The uptick in jobs in October is a big reversal from September when the economy added a revised 312,000 jobs. Back then the Delta variant of COVID-19 was still rapidly spreading.
Investors Are Relieved
The strong jobs report sent stocks higher Friday, as investors released a collective sigh of relief. Concerns that rising inflation and labor shortages would hurt economic growth have been alleviated, at least for now. October marked the first month in a while in which economic recovery wasn’t hit with a surge of COVID-19 cases.
Meanwhile, employers desperate to hire more workers to meet strong consumer demand are raising wages, offering bonuses, and providing more flexible work schedules. At the same time, households are spending a lot of their savings amassed during the pandemic. With federal stimulus and extra unemployment benefits over, many are returning to work.
Hospitality Leads the Way
The leisure and hospitality sector led the job gains in October, adding 164,000 workers. Americans are eating out again, hitting bars, and going on vacations, which is driving demand for hospitality workers. So far this year, the leisure and hospitality sector has regained 2.4 million jobs which disappeared during the pandemic. The professional and business services, manufacturing, transportation, warehousing, construction, and healthcare industries also saw job growth in October.
While concerns about inflation, job shortages, and COVID-19 are still weighing on investors’ minds, October’s jobs report is reason to be optimistic. Investors are now paying close attention to see if the job growth seen in October continues in the coming months.
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