U.S. Economy Added 531,000 Jobs Last Month—But 7.4 Million Americans Are Still Unemployed

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Topline

The U.S. added back a better-than-expected 531,000 jobs in October—marking the long-struggling labor market’s best monthly showing since July in a sign that the recent pandemic-sparked lull in employment could finally be on the mend.

Key Facts

October’s new job gains were greater than the 450,000 new jobs expected by economists, according to data released Friday by the Labor Department.

In another promising sign for employment, the Labor Department increased its growth estimates for the months of September and August by 235,000 jobs combined.

The unemployment rate clocked in at 4.6%, compared to 4.8% in September—hitting its lowest point in more than a year but still well above pre-pandemic levels of about 3.5%.

Despite the better-than-expected jobs data, the number of unemployed people in the United States fell only slightly from 7.7 million in September to about 7.4 million, which is still markedly higher than 5 million in February 2020, the government said.

Additionally, the labor force participation rate, which measures the percentage of workers who are employed or actively seeking employment, stayed flat at 61.6% and has barely budged since June 2020—likely reflecting the record-high levels of individuals quitting their jobs, Bankrate analyst Mark Hamrick said in a Friday note.

Crucial Quote

“The labor market is not back to pre-Covid-19 levels, but it has staged an impressive comeback over the past 18 months,” Jay Pestrichelli, the CEO of Florida-based investment firm Zega Financial said in an email Friday, noting the pace of hiring rebounded last month as Covid-19 cases declined and restrictions eased. “The expiration of federal enhanced unemployment benefits back in September may have encouraged more workers to return to the labor force, contributing to the strength of the labor market in October.”

Tangent

Likely reflecting the decline in Covid-19 cases, notable job gains last month occurred in industries most sensitive to pandemic restrictions, including leisure and hospitality, manufacturing and transportation.

Key Background

The better-than-expected jobs data Friday marks a much-needed respite for the labor market after a slew of recent data points showing ongoing struggles around employment. After adding more than 1 million jobs in July, new job gains fell for two months straight this summer—each time falling short of economist projections. “The delta variant of Covid-19 appears to have dented the job market recovery,” Mark Zandi, the chief economist of Moody’s Analytics, said of the lackluster employment readings, echoing experts concerned the pandemic’s resurgence has slowed down the economic recovery. New unemployment claims, which also clocked in higher than was expected for three weeks in September, have finally started to show improvement. 

Surprising Fact

The unemployment rate hit a record high of 14.7% at the height of pandemic uncertainty in April 2020. The U.S. has thus far recovered about 80% of the 20.5 million jobs U.S. employers cut between March and April of last year.

Further Reading

Jobless Claims Hit New Pandemic Low As Number Of Americans Receiving Unemployment Benefits Falls To 2.7 Million (Forbes)

U.S. Labor Market Posts Worst Month This Year As 7.7 Million Americans Remain Unemployed (Forbes)

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