The US job market snapped back in October, with nonfarm payrolls increased by 531,000 for the month. However, the biggest labor shortage in decades is still holding back an economic recovery and adding to the largest surge in inflation in three decades. The picked up in October hiring came on top of a large upward revision to August’s and September’s tally. Job gains in September and August were also stronger than originally reported. The change in total nonfarm payroll employment for August was revised up by 117,000, from +366,000 to +483,000, and the change for September was revised up by 118,000, from +194,000 to +312,000. With these revisions, employment in August and September combined is 235,000 higher than previously reported.
Restaurants, hotels, theatres and other companies in the hospitality business created 164,000 new jobs last month to lead the way as Americans ventured out to eating and drinking establishments and went on vacations again as COVID-19 numbers fell during the month. These companies are the most sensitive to the coronavirus and hiring briefly dried up during the rapid spread of the coronavirus delta variant. For 2021, the sector has reclaimed 2.4 million positions lost during the pandemic. Employment also increased by 100,000 at white-collar professional businesses, 60,000 in manufacturing, 54,000 in transportation and 44,000 in construction while health care was up 37,000 and retail added 35,000. Employment fell by 73,000 in government, but the decline largely reflects disruptions in education at the state and local levels tied to the pandemic.
The unemployment rate fell to 4.6%, down from 4.8% and hit a new pandemic low. Perhaps the one area which wasn’t as impressive was the participation rate which stayed steady at 61.6%. Average hourly earnings were up 4.9% from a year ago in October, as a healthy demand for workers is driving wages higher across sectors.
The unemployment rate fell to a 19-month low of 4.6% from 4.8% in September. The number of people unemployed for 27 weeks or more dropped 357,000 to 2.3 million. They accounted for 31.6% of the 7.4 million people officially unemployed last month. The unemployment rate drop came with the labor force participation rate holding steady at 61.6%, still 1.7 percentage points below its February 2020 level before the pandemic declaration. That represents just shy of 3 million fewer Americans considered part of the workforce and is reflective of ongoing concerns about staffing levels. While the strength of employment was an encouraging sign that labor demand remains strong, labor supply remains very weak. The labor force rose by a muted 104,000, which is not even enough to even keep pace with population growth, making it harder for employers to fill 10.4 million jobs that were open as of the end of August. However, one metric that the Federal Reserve watches closely, the participation rate among so-called prime age workers 25 to 54, ticked higher to 81.7%. Even with the rebound in October, the Bureau of Labor Statistics’ survey of households in October showed job holders rising by 359,000, leaving the employment level about 4.7 million below its pre-pandemic level. Women's participation rate edged up and they took 57.3% of the jobs last month. Job growth has averaged 582,000 per month this year. A separate measure of unemployment that incudes discouraged workers and those holding part-time jobs for economic reasons fell to 8.3% from 8.5%. That rate was 7% before the pandemic. A broader measure of unemployment (U6) that includes discouraged workers and those holding part-time jobs for economic reasons fell sharply, dropping to 7.7% from 8.1% in Sep.
The demand for labor is forcing businesses to compete for workers and entice them with higher pay. Average hourly wages rose 0.4% mom in October, pushing the annual rate up to 4.9% and, with the mix of job gains skewed towards low-wage workers, that is probably understating wage growth. The 4.9% increase in wages over the past 12 months is the fastest since the government adopted new tracking measures in 2006. The last time worker pay rose as fast was in the early 1980s during another period of high inflation.
Source: BIMB Securities Research - 8 Nov 2021
Created by kltrader | Aug 12, 2024
Created by kltrader | Aug 12, 2024
Created by kltrader | Aug 09, 2024
Created by kltrader | Aug 09, 2024