The economy added 638,000 jobs and the unemployment rate dipped to 6.9% in October, the Labor Department said in a jobs report Friday that beat forecasters’ expectations and provided reason for optimism about the economy.
“The October employment report has delivered welcome and substantially better-than-expected news,” said Mark Hamrick, Bankrate.com senior economic analyst.
Hiring remained extremely high by historical standards, especially considering that October’s total would have looked better if not for the loss of nearly 150,000 temporary census jobs. The even better news was that unemployment fell even as 724,000 people entered the workforce.
The strength of Friday’s report may allay economists’ fears that the pace of recovery is not enough to avoid a prolonged recession. After record-smashing job growth in the summer as employers rehired workers who had been laid off in the first wave of the pandemic, payroll gains have fallen off the pace needed for a rapid recovery to normal.
The labor market has recovered only about half of the 22 million jobs lost in the spring due to the pandemic. Getting those remaining jobs back will take longer as fewer firms are looking to add new workers in the fourth quarter.
Furthermore, the survey of households included in Friday’s report showed 3.7 million people reporting permanent job losses in October, the second-highest total of the pandemic. The rate of permanent job losses has been rising, raising the fear that the pandemic shutdowns will translate into long-term labor market damage.
Thursday’s report also showed long-term unemployment rising by 1.2 million to 3.6 million.
A top worry facing businesses is that the surge in cases of COVID-19 will lead to more disruption. “The outlook for the economy is extraordinarily uncertain and will depend in large part on the success of efforts to keep the virus in check,” Federal Reserve Chairman Jerome Powell said Thursday. The number of new coronavirus cases in the United States topped 120,000 on Thursday, beating Wednesday’s record high of more than 100,000 new cases.
Friday’s report showed notable employment gains in the leisure and hospitality sector, with more than 270,000 jobs being added.
Professional and business services added 208,000 jobs in October, with temporary help services adding 109,000 new positions, which accounted for about half of the sector’s gain.
The retail sector, which has been badly hurt by the pandemic, added 104,000 in October.
The jobless rate decreased for all races, but it was still above the national average for African American workers with a 10.8% jobless rate. The rate for Asian workers was 7.6%. Meanwhile, the unemployment rate for white workers was below the national average, 6%.