Jobs Report: October is a Close Replay of September

October is a close replay of September as 638,000 new jobs were created and the unemployment rate dropped further to 6.9%.

JOB GROWTH: This month’s jobs report offered a very déjà vu moment with October jobs growth of 638,000, a near duplicate of September activity. 

TOP INDUSTRIES: As was the case last month, significant gains were reported in leisure and hospitality, professional and business services, and retail trade. Employment was also up in construction. Job numbers went down in the government sector, with losses tied to temporary census workers and education.

UNEMPLOYMENT: With more people returning to the workforce, the unemployment rate dipped another point lower in October. The rate has been dropping now for six consecutive months as the economy continues to expand and more Americans, across every measured demographic, get back to work.

PANDEMIC SUPPLEMENT: To help gauge the impact of coronavirus on the labor market, BLS has expanded the questions it typically asks every month. The answers to these questions track the improving trends reported in the standard survey, i.e., fewer people worked remotely and fewer were home due to continued business closures.

WAGES: There was a four-cent uptick in average hourly earnings in October.  

WORK WEEK: The average work week was 34.8 hours.

TEMPORARY JOB TRENDS: Last month, we reported positive but significantly slower momentum in the temporary help sector. That trendline has shifted considerably. First, September job creation was revised upward from 8,100 to 21,800. Then in October, the temporary help sector saw an even more substantial jump in jobs to 109,000. 

WHAT DOES IT ALL MEAN? The country is moving forward. The outlook for growth is positive as job creation remains strong, espeically in the industries that have benefited from the pandemic, such as warehousing, e-commerce and technology, and the ranks of the unemployed continue to shrink. While we may not end the year ahead of where we started it, the country is moving in the right direction for a 2021 rebound, as we recover from the coronavirus and the steps taken to mitigate it. 

This month’s report exceeded the expectations of many analysts, who have concerns about the high number of long-term unemployed, the year-end discontinuation of state and/or federal supplements for those who remain unemployed, and the lack of gains in compensation this whole year.

While an economic downturn seems reason enough to hold the line on compensation increases, employers should keep in mind that offering lower compensation now could backfire in multiple ways in the future. Not only can it breed resentment in the ranks, research shows employees who accept a lower salary when they believe their options are limited, will be quick to demand more money as soon as conditions improve. 

Sources: U.S. Bureau of Labor Statistics (BLS), Steinberg Employment Research, CNN, Staffing Industry Analysts, American Staffing Association, CNBC, FOX News, CNN, The Street, Barron’s, NBC News