Better Than Expected: U.S. Economy Added 638,000 Jobs in October, Unemployment Dropped to 6.9%

Economists had forecast 530,000 jobs and a decline in the unemployment rate to 7.7 percent, two-tenths of a percent October’s 7.9 percent. The Labor Department had initially reported that the economy added 661,000 jobs in September.

Private-sector payrolls grew by 906,000 jobs in October, much more than expected and above October’s figure.  Government employment fell by 268,000, including a 138,000 loss in jobs at the federal government. The decline in federal government workers was driven by the loss of 147,000 temporary census workers. Local government education and state government education workers also decline, by 98,000 and 61,000 respectively.

The workforce participation rate jumped to 61.7 percent from 61.4 percent in the prior month. Average hourly earnings ticked up 0.1 percent and are now 4.5 percent above the year-ago level.

Manufacturing rose by 38,000 in October but is still 621,000 below the prepandemic February level.

Construction payrolls grew 84,0000. Over the past six months, as demand for new housing has surged, construction has added 789,000 jobs. Despite the gains, payrolls remain 294,000 below February’s level.

Leisure and hospitality employment grew by 271,00 jobs, with restaurants and bars adding 192,000. Arts, entertainment, and recreation added 44,000. Hotels and motels added 34,000.

Retail trade added 104,000 jobs, with nearly one-third of the gain in electronics and appliance stores. Car dealerships and parts stores added 23,000. Furniture stores added 14,000 jobs, clothing stores added 13,000, and general merchandise stores added 10,000. Online retailers added 9,000 jobs.

The economy has added around 12 million jobs in the past six months, a record-breaking pace. The increase in the ranks of employed workers shows that companies ramped up hiring as the economy reopened and consumers came back to stores, restaurants, and other businesses that had been shuttered in March and April. Despite the gains, total employment in August was lower than its February level, highlighting just how deep the pandemic cut into what had been the strongest jobs markets in decades.

Yet layoffs remain high, indicating that the pandemic’s effects are still ravaging the economy. A separate report on Thursday showed that 751,000 Americans applied for unemployment benefits in the prior week, the lowest since the pandemic struck but still higher than any week in post-World War 2 U.S. history prior to the pandemic.

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