United States: Labor market improves at a more moderate pace in October
Total non-farm payrolls rose 638,000 in October, beating market analysts’ expectations of a 600,000 increase. This follows September’s 672,000 payroll rise. Employment in the retail trade, professional and business services, leisure and hospitality, and construction sectors increased notably, reflecting the gradual resumption of economic activity.
The unemployment rate decreased to 6.9% in October from 7.9% in September, while the labor force participation rate ticked up to 61.7% in October from 61.4% in September. Hourly earnings increased 0.1% month-on-month in October (September: +0.0% mom), while annual wage growth eased to 4.5% from 4.6% in September.
Next year, the labor market should continue to recover but at a gradual pace. The moderating rate at which the labor market is adding total non-farm payrolls suggests it’s becoming harder and harder to find job gains each month. Moreover, despite the current presidential results pointing to a power shift in favor of Biden’s Democrats, the race for the Senate seems to point to a divided Congress, which could frustrate the passage of the Democrats’ ambitious spending plans and a hefty additional stimulus package—boding poorly for job creation.
Commenting on October’s jobs report and the short-term outlook on the labor market, Katherine Judge, a senior economist at CIBC Economics, noted:
“Although the labor market is in a better position than thought, the surge in new virus cases suggests that the strength could be fleeting. Consumers in the virus hotspot of the Midwest have already started to curtail movement, a precursor to slower employment gains or possibly a reversal in gains.”