Gosh, remember last month when the media went absolutely nuts over the supposed failing economy because the jobs numbers didn’t meet expectations? How Joe Biden’s catastrophically failed presidency was probably irretrievable? (Yes, my sarcasm matches the hysteria of the coverage.)
Well, guess what?
Economy Adds 531,000 Jobs in October Unemployment Falls to 4.6 Percent
The economy added 531,000 jobs in October, as the unemployment rate fell to 4.6 percent, a level not reached following the Great Recession until February of 2017. The jobs numbers for the prior two months were also revised upward by 235,000 to bring the three-month average to 443,000.
It’s also worth noting that private sector employment grew even more rapidly, adding 604,000 jobs. The hours worked index, which only measures private sector employment, has risen by 1.2 percent in the last three months, which would translate into 498,000 private sector jobs per month, if there were no change in hours. Many employers who are unable to hire are likely increasing the hours for the workforce they have.
Unemployment Falls for Most Groups
The drop in the unemployment rate was much larger than most analysts has expected, especially after a 0.4 percentage point decline in September. It has fallen by1.3 pp since June. The least educated saw the largest drop in unemployment with the rate falling by 0.5 pp for those without a high school degree to 7.4 percent and 0.4 pp for those with just a high school degree to 5.4 percent. The unemployment rate for college grads edged down 0.1 pp to 2.4 percent, which is 0.3 pp above its pre-pandemic average.
The unemployment rate for Blacks and Asian-Americans was unchanged at 7.9 percent and 4.2 percent, respectively. It fell 0.4 pp to 5.9 percent for Hispanics.
Wage Growth Remains Strong
We continue to see strong wage growth, especially for low-paid workers. The average hourly for production and non-supervisory workers has risen 5.8 percent, in the low-paid leisure and hospitality sector it has risen 12.4 percent. However, wage growth is slowing somewhat in the leisure and hospitality sector. The annual rate for the last three months (August, September, October) compared with the prior three months (May, June, July) was 9.7 percent, although it accelerated slightly for production workers overall to 6.6 percent.
Manufacturing and Construction Have Strong Growth, Again
The manufacturing sector added 60k jobs, following a gain of 31k in September. Construction added 44,000 jobs after adding 30,000 in September. The sectors are now down 2.1 percent and 2.0 percent, respectively, from their pre-pandemic levels. This compares to a falloff of 2.3 percent for the private sector as whole. That reverses the normal pattern where these sectors are hit hardest in a recession.
Strong Job Growth in Hard-Hit Service Industries
Most of the hardest hit industries showed good job growth in October. Air transportation added 9.2k jobs, but is still down 9.2 percent from its pre-pandemic level. The motion picture industry added 11.3k jobs and is now down 20.9 percent. The temp sector added 41.1k, while arts and entertainment added 21.9k jobs. They are now down 16.0 percent and 11.4 percent, respectively from pre-pandemic levels. Hotels added 23.2k jobs, while restaurants added 119.4k leaving them 14.9 percent and 6.4 percent lower than their pre-pandemic levels.
Nursing homes added 11.8k jobs, but employment is still 14.2 percent below pre-pandemic levels. Child care facilities added just 0.7k jobs in October, leaving employment 10.1 percent below pre-pandemic levels. This presumably corresponds to a roughly 10 percent drop in child slots, which means many parents of young children face even greater than normal difficulties finding care if they want to work.
State and Local Education Shed 65,000 Jobs
This sector continues to lose jobs even with children back in school pretty much everywhere. This could reflect difficulty in hiring, as governments often can’t raise wages as rapidly as in the private sector. Employment in the sectors are now down 7.9 percent and 4.6 percent from pre-pandemic levels, respectively.
The Number of Unincorporated Self-Employed Edged up by 24k
The October figure is 643k (7.3 percent) above the 2019 average. This presumably reflects people taking advantage of the pandemic to change career paths.
Share of Long-Term Unemployed Falls
The share of long-term unemployed (more than 26 weeks) fell sharply in September to 31.6 percent. However, it is still well above normal levels, which would be under 20 percent
October Report is Solidly Positive
There is not much to not like in this report. The overall picture in both surveys is overwhelmingly positive. If we can keep up this pace of growth we will get back the jobs lost in the pandemic by next summer. The unemployment rate is already below many economists estimates of NAIRU. And workers have more freedom to change jobs than at any point in the last half century
The rise in index of aggregate hours since July, is equivalent to adding 498k private sector jobs a month.
I’m sure this spells doom for the Democrats for some reason. I’ll wait for the Sunday shows to tell me why.