The U.S. jobs market roared back in October from a late-summer lull, easing concerns about the resiliency of the pandemic recovery amid the surge of the delta variant and labor shortages.
Since adding more than a million jobs in July, the labor market had slowed sharply through the rest of the summer, with sizeable letdowns in August and September.
But the Labor Department reported Friday that nonfarm payrolls increased by 531,000 last month, topping the Dow Jones estimate of 450,000. It also revised the August and September reports, adding 235,000 jobs to those months’ numbers and bringing the three-month average to 442,000.
The unemployment rate fell to 4.6% in October from 4.8% as the labor force participation rate, or the share of adults who are part of the labor force, held steady at 61.6%.
“This was a strong employment report that shows the resilience of the labor market recovery from the pandemic,” Scott Anderson, chief economist at Bank of the West, told The New York Times. “I think we will see a pretty strong bounce back in economic growth in the fourth quarter.”
The Times said the October numbers “undermine stories that the jobs recovery has petered out, or that the inflationary surge of the last several months is giving way to a period of ‘stagflation’ — stagnant growth paired with higher prices.”
The critical leisure and hospitality sector led the way, adding 164,000 job as Americans ventured out to eating and drinking establishments and went on vacations again. Other sectors posting solid gains included professional and business services (100,000), manufacturing (60,000), and transportation and warehousing (54,000).
The labor force participation rate is still 1.7 percentage points below its February 2020 level, underscoring the toll that the pandemic has taken on the labor supply. But among those in their prime working years — ages 25 to 54 — the rate rose slightly, to 81.7% in October from 81.6% in September.
“The idea that somehow we’ve reached a new post-COVID normal and that we’re not going to see stronger job growth because labor supply is constrained and there are going to be permanent labor shortages is simply misguided,” said Gregory Daco, chief U.S. economist at Oxford Economics.