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US economy picks up steam, adding 531,000 jobs

After two months of payroll growth falling well below expectations, the labor market came roaring back in October, led by hiring at restaurants and bars.

(CN) — American employers added 531,000 jobs last month, signaling an accelerated recovery after a slowdown caused by the delta variant of the coronavirus.    

According to a Labor Department report released Friday morning, the unemployment rate dropped 0.2% to 4.6%. That’s the lowest level since March 2020, but still above the pre-pandemic rate of 3.5%.  

The number of new jobs in October beat economists’ expectations of about 450,000, following two months of disappointing growth.

Nick Bunker, economic research director at Indeed Hiring Lab, said the latest jobs report shows the potential for a quick recovery.

“This is the kind of recovery we can get when we are not sidelined by a surge in Covid cases. If this is the sort of job growth we will see in the next several months, we are on a solid path,” he wrote. “The public health situation needs to be under control for the U.S. labor market to have a sustained economic recovery.”

The leisure and hospitality sector led the way with 164,000 new jobs. There were 119,000 more jobs at food and drink establishments and 23,000 more in accommodation. However, the industry is still down 1.4 million jobs since February 2020, before the pandemic forced many of those businesses to close their doors.  

Professional and business services added 100,000 positions last month and manufacturing payrolls rose by 60,000. Notable gains were also seen in transportation and warehousing (54,000), construction (44,000), health care (37,000) and retail (35,000). Most of those industries are still down hundreds of thousands of jobs compared to their pre-pandemic levels.

The public sector, meanwhile, lost 73,000 jobs, including 43,400 in local government education and 21,500 in state government education. Employment at the federal government level fell by 3,000, including 2,400 fewer jobs at the U.S. Postal Service.

While the job gains in August and September were seen as disappointing at the time, Friday’s report says they have been revised up by a combined 235,000 jobs. August payroll growth was revised up 117,000 to 483,000 and September’s was revised up 118,000 to 312,000.  

Monthly job growth is averaging 582,000 so far this year, though the U.S. economy is still down a total of 4.2 million jobs since February 2020.

“The labor market is not yet fully recovered from the coronavirus-induced recession. But today’s report is a sign that recovery could be closer than many thought,” Bunker said. “We just need to get the pandemic behind us. The speed of employment gains has faltered at times this year, but the underlying momentum of the U.S. labor market is quite clear.”

The better-than-expected jobs report comes two days after the Federal Reserve announced it will begin slowing the pace of its monthly bond purchases, a program meant to help keep markets afloat during the recession caused by the pandemic. It said it will reduce asset purchases by $15 billion a month starting later this month, with the program expected to fully end by mid-2022.

The move signals a cautious optimism over the trajectory of the recovery.

“In light of the substantial further progress the economy has made toward the committee's goals since last December, the committee decided to begin reducing the monthly pace of its net asset purchases by $10 billion for Treasury securities and $5 billion for agency mortgage-backed securities,” the central bank’s Federal Open Market Committee said Wednesday.  

As for interest rates, the Fed said it will keep them near zero for now while the economy continues to heal. Despite worries about rising inflation in the short term, the committee said inflation still has not hit the long-term annual target rate of 2%.  

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