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Healthy Footing Heading into the Cold

The October jobs print of 638,000 net payroll jobs is a healthy gain underpinned by other signs of strength in the report. The virus and the related policy response or absence thereof will continue to be key determinants of the path of the labor market, but today’s report reflects a labor market that continues to show signs of sustainable recovery despite those headwinds.

Payrolls in October gained 638,000 jobs, with private sector payrolls gaining 906,000 jobs and the service sector picking up 783,000 jobs. The leisure and hospitality industry gained 271,000 jobs. Goods-producing industries saw an increase of 123,000 with construction picking up the 84,000 new jobs. Government payrolls declined by 268,000, driven in part by a 138,000 decline in federal workers due to the conclusion of census-related work. State and local governments lost a net 130,000 workers, driven by gross losses in educators of just under 160,000. Since May, the economy has recovered 54 percent of the 22.1 million jobs lost in March and April.

The unemployment rate fell to 6.9 percent, a much larger decline than would be implied from the topline payroll gain. The household survey showed much larger increases in employment and declines in unemployment of 2.2 million and 1.5 million, respectively. The labor force gained 724,000, following a decline of 695,000 in the previous month. Over the last 6 months, just under 4.4 million workers entered the labor force, marking a recovery of over half of the 8 million workers who left the labor force between February and April.

The unemployment rate dropped for all education levels, with all now in single digits. Those with less than a high school diploma are now at 9.8 percent, while those with some college or an associate degree dropped the most, 1.6 points, to 6.5 percent. Those with a high school diploma dropped to 8.1 percent, while those with a bachelor’s degree or higher dropped to 4.2. The unemployment rate decreased for all races as well. Unemployment decreased by 1.0 percentage points for Whites and 1.3 percentage points for both African Americans and Asians. Unemployment decreased the most for Hispanics, dropping by 1.5 percentage points.

Average hourly earnings gained by 4 cents, reflecting a 4.76 percent yearly gain that is somewhat distorted by the compositional changes to the workforce over the course of the pandemic. Average hourly earnings for production and non-supervisory workers increased 5 cents for a 4.46 percent gain over the year.

Data junkies here’s your fix: The October U-6 (the broadest measure of unemployment) decreased 0.7 percentage points to 12.1 percent, driven by a 0.8 percentage point decline in persons unemployed for 15 weeks or longer, which is also reflected in the U-3.