Economy adds 638K jobs in October, unemployment dips below 7 percent

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The U.S. added 638,000 jobs and the unemployment rate fell to 6.9 percent in October, according to data released Friday by the Labor Department.

The October jobs report showed the U.S. continuing to recover jobs lost to the coronavirus pandemic and slightly exceeded economists’ projections. Economists had expected the U.S. to gain roughly 600,000 jobs in October after adding 672,000 in September and seeing the unemployment rate fall to 7.9 percent, according to revised figures.

October’s decline in unemployment came as the labor force participation rate increased by 0.3 percentage points, meaning that a greater portion of Americans were both seeking and finding jobs last month than in September. The number of workers who permanently lost their jobs also stayed flat at 3.7 million, a welcome sign after several months of increases.

October’s job gains were driven by the addition of roughly 906,000 private sector workers and buffeted by the loss of 268,000 government employees, including the loss of 147,000 temporary 2020 census workers.

The hard-hit leisure and hospitality sector saw a gain of 271,000 jobs in October, 192,000 of which were added by food services and drinking places. The sector has added 4.8 million jobs since April, but employment in the industry is still down by 3.5 million from February.

Professional and business services added 208,000 jobs in October, including 109,000 in temporary help services, retailers added 104,000 workers, construction employment rose by 84,000 and health care and social services added 79,000 jobs.

Even so, October marked the fifth straight month of slowing job gains since June. There are roughly 10 million of the more than 20 million jobs lost to the pandemic that have yet to be regained, and economists fear that steadily rising coronavirus cases could severely hinder the labor market recovery.

The number of long-term unemployed — those who’ve sought work unsuccessfully for at least 27 weeks — skyrocketed by 1.2 million to 3.6 million in October. Many of those workers may have lost or are at risk of losing unemployment insurance due to the length of their joblessness.

“With colder weather setting in, it will be more difficult for businesses that relied on outdoor spaces — particularly restaurants and other leisure businesses — to continue respect social distancing measures and remain open,” wrote Cailin Birch, global economist at The Economist Intelligence Unit, in a Friday analysis.

“In the absence of another comprehensive stimulus bill before 2021, many companies may find it increasingly hard to survive. We do not expect to see significant job gains in the coming months, as a result.”

The U.S. saw more than 100,000 confirmed cases of COVID-19 in each of the past two days, trend Federal Reserve Chairman Jerome Powell called “particularly concerning” in a Thursday press conference.

“It does seem likely that people who have maybe begun to engage in activities that they hadn’t—flying, staying in a hotel, going to restaurants, going to bars and things like that — that they may pull back in a situation where suddenly cases are everywhere in your city, your state, your community,” Powell said.

“That could weigh on economic activity,”

Powell also renewed his call for another fiscal stimulus bill, which faces an uncertain future on Capitol Hill.

Both Speaker Nancy Pelosi (D-Calif.) and Senate Majority Leader Mitch McConnell (R-Ky.) have expressed a desire to pass another bipartisan coronavirus relief measure before 2021, but it remains to be seen how the results of the 2020 elections could influence negotiations.

Democratic presidential nominee Joe Biden took leads in Georgia and Pennsylvania as ballots were counted Friday morning, and wins in those states would clinch him the presidential election. Both Georgia Senate seats also appear to be heading to runoff elections that could determine the Senate majority.

“Even if today’s report was slightly stronger than expected, the need for additional fiscal stimulus is clear,” said Principal Global Investors chief strategist Seema Shah in a Friday analysis.

“With large parts of the U.S. economy simply unable to get back to normal in the worsening pandemic, whoever ends up in the White House will eventually have to take notice of the calls for further support as they grow louder and more desperate.”

Updated at 9:25 a.m.

Tags 2020 election economy Jobs report Joe Biden Labor Bureau Mitch McConnell Nancy Pelosi Unemployment
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