US job growth quickens as gain of 531,000 outstrips estimates
The U.S. labor market got back on track last month with a larger-thanforecast and broad-based payrolls gain, indicating greater progress filling millions of vacancies as the effects of the delta variant faded.
Nonfarm payrolls increased 531,000 last month after large upward revisions to the prior two months, a Labor Department report showed Friday. The unemployment rate fell to 4.6% while the labor force participation rate was unchanged.
The median estimate in a Bloomberg survey of economists called for a 450,000 payrolls gain and for the jobless rate to fall to 4.7%. The dollar held on to gains after the data, while the yield on the 10-year Treasury note fluctuated. U.S. stockindex futures rose.
The data paint a sunnier picture of the job market than previously thought, with easing COVID-19 cases and higher wages helping employers fill near-record openings. At the same time, the labor-force participation rate has barely budged in recent months as millions of Americans remain on the sidelines, and the loss of federal expanded unemployment benefits for 7.5 million people may have helped boost payrolls.
The figures help validate the Federal Reserve’s decision this week to begin scaling back its pandemic-era pace of bond-buying aimed at keeping borrowing costs ultra-low. They may also give a boost to President Joe Biden as his approval ratings sag and he struggles to get more than $2 trillion in tax and spending proposals through Congress.
Payroll gains last month were led by a 164,000 increase in leisure and hospitality. Professional and business services, transportation and warehousing, and manufacturing also posted significant increases.
Factory employment jumped by 60,000 in October, the most since
June of last year and largely reflecting a surge in automakers’ payrolls. Government employment fell.
Average hourly earnings rose 4.9% in October from a year ago, the most since February, though inflation is taking a bigger bite out of workers’ paychecks.
The increase underscores workers’ ability to demand higher pay amid an ongoing labor shortage.
Higher wages could mean that more businesses raise prices to protect margins as the costs of labor, materials and transportation climb, stoking inflation. Prices have increased by the most in three decades on a year-over-year basis, driven by supply chain bottlenecks and shortages.
“We have high inflation and we have to balance that with what’s going on in the employment market,” Fed Chair Jerome Powell told reporters on Wednesday following the central bank’s policy meeting. “It’s a complicated situation.”
October’s gain leaves payrolls 4.2 million below their pre-pandemic level. The pace of hiring in the coming months risks being restrained by new COVID flareups. Recent data show hospitalizations increasing in 13 states, which could signal another virus wave. Health care payrolls climbed in October by the most this year, led by home health care and nursing.
“The demand for labor has recently coincided with the shortage of available workers, particularly in the United States...it has led to wage increases and sign on incentives as companies compete for workers as well as inconsistent staffing levels in our operations.” — Amazon. com Inc. CFO Brian Olsavsky, Oct. 28 earnings call
“Certainly, the higher wages that you pay, it allows you to stay competitive, but we’re also seeing that is just, it’s very challenging right now in the market to find the level of talent that you need.” — Mcdonald’s Corp. CEO Chris Kempczinski, Oct. 27 earnings call.