U.S. jobs and wages report shows strong economic recovery
U.S. employers ramped up hiring last month, adding 531,000 solid jobs, the most since July and a sign that the recovery from the pandemic recession is overcoming a virus-induced slowdown.
Friday’s report from the Ministry of Labor also showed that the unemployment rate fell to 4.6% last month from 4.8% in September.
That’s a relatively low level though, still well above the pre-pandemic unemployment rate of 3.5%. And job gains in August and September were not as small as initially announced: the government increased its hiring estimate for these two months by a whopping 235,000 jobs combined.
All in all, the numbers point to an economy that is gradually recovering from the pandemic recession, with healthy consumer spending prompting companies in nearly every industry to add workers. Although the effects of COVID-19 are still causing severe supply shortages, increasing inflation and preventing many people from working, employers are gradually succeeding in filling near-record vacancies.
“This is the kind of recovery we can get when we are not sidelined by an increase in COVID cases,” said Nick Bunker, director of economic research at employment website Indeed. . “The speed of employment gains has at times weakened this year, but the underlying dynamics of the US labor market are pretty clear.”
The better-than-expected jobs report was well received on Wall Street, where investors sent stocks deeper into record territory. The Dow Jones Industrial Average rose more than 200 points, or about 0.6%, during Friday’s trading. Short-term Treasury yields have risen as some investors have raised their expectations of when the Federal Reserve will start raising interest rates. But longer-term yields have fallen amid long-term inflation expectations subdued.
According to most barometers, the economic recovery seems well underway. Service companies in areas such as retail, banking and warehousing reported strong sales increases. Sales of new and existing homes jumped last month. And consumer confidence rose in October after three consecutive declines.
At the same time, however, the country remains 4.2 million jobs below the number it had before the pandemic flattened the economy in March 2020. The effects of the virus are still discouraging some people from traveling, to shop, eat at restaurants and attend entertainment. premises.
In October, the pick-up in hiring was spread across almost all major industries, with only government employers reporting job losses, mostly in education. Transportation and warehousing companies created 54,000 jobs. The struggling leisure and hospitality sector, which includes restaurants, bars, hotels and entertainment venues, gained 164,000. Manufacturers, despite struggling with supply shortages, added 60 000, the most since June 2020.
And employers, who were competing to fill positions from a small pool of candidates, increased wages at a steady pace: the average hourly wage jumped 4.9% in October year-on-year. previous month, compared to 4.6% the previous month. Even such a large gain, however, barely keeps pace with recent spikes in consumer inflation.
These price increases are a headwind for the economy. The higher costs of food, fuel, rent and furniture have weighed on millions of families. Prices rose 4.4% in September from 12 months earlier, the largest such increase in three decades.
Among those receiving pay increases, some of the biggest beneficiaries are the record number of people who have quit their jobs to take one over. One of them is Christian Frink, who started working as a business analyst at a digital consulting firm. In his new job, Mr. Frink of Ferndale, Michigan, helps corporate clients determine the technologies they need.
Earlier this year, Mr. Frink took a job in marketing but left it because, like many people during COVID, he felt exhausted. He then worked for Door Dash in the spring and summer to earn money and looked for a new job. Although employers complained of a labor shortage, several told him they would not hire anyone without a university degree. (Mr. Frink attended college but did not graduate.)
Last summer, Mr. Frink took coding classes at Tech Elevator, a boot camp, and then landed his new job. Today, he earns 35% more than in his previous job and says he is “blown away” that he already has health coverage and doesn’t have to wait months to become eligible.
Yet it’s not just people who change jobs who receive pay increases. Chad Leibundguth, regional manager in Tampa for recruiting agency Robert Half, said the job market is the strongest for workers he has seen in his 22-year career. Before the pandemic, he said, you could get a customer service job in Florida for $ 14 an hour.
“Today,” he said, “you have to be closer to $ 20 an hour because people have options. “
Job prospects improve even for people who have been unemployed for long periods. The number of long-term unemployed – people without a job for six months or more – has fallen sharply in recent months, from 4.2 million in April to 2.3 million in October. This is still double the pre-recession total. But this is an encouraging sign as employers are generally reluctant to hire people who have not held a job for a long time.
At the same time, disparities in the labor market persisted. The unemployment rate for blacks remained unchanged in October at 7.9%, for example, while for white workers it fell to 4% from 4.2%. The Latin American unemployment rate fell to 5.9% from 6.3%.
And although white-collar jobs in professional services like information technology, engineering and architecture have almost returned to their pre-pandemic employment levels, leisure and hospitality still matter. 1.4 million fewer jobs.
Hari Ravichandran, CEO of digital security provider Aura in Boston, says his 800-person company has 140 open positions, mostly in software development.
Mr. Ravichandran is ready to hire remote workers; 170 of its employees have never worked regularly in any of the company’s buildings. Yet hiring remains as difficult as it has ever known.
A disappointing note in Friday’s report is that the workforce – the number of people working or seeking employment – was unchanged in October. This suggested that the reopening of schools in September, the decline of the virus, and the expiration of a $ 300-per-week federal unemployment supplement had yet to push many people out of the workforce in droves.
Getting many people back to work after a recession is usually a long process. There are now 7.4 million people officially unemployed – just 1.7 million more than in February 2020, before the pandemic hit the economy. Yet millions more who lost their jobs during the recession have given up on their job search, and employers may have to increase wages and benefits to bring them back, said Aaron Sojourner, labor economist at the University of Minnesota.
Despite this, some companies still cannot find enough workers. Many parents, especially mothers, have not returned to the workforce after quitting their jobs during the pandemic to care for children or other loved ones. Still, there was evidence of a small rebound last month: The proportion of women working or looking for work rose after two months of decline.
Kourtni Graves of Detroit has been at work and unemployed during the pandemic due to her parenting duties. She quit a job as an administrative assistant a year ago because her daycare had closed and she had to take care of her twins.
Ms Graves was looking for a job from home, but many employers didn’t want to give her the flexibility she needed.
“They don’t want you to have to pick your kids up from school,” especially in training, she said. “For me as a mother, I can’t do this.” She said the father of her children, who works in the auto industry, helps financially.
But with the girls now in kindergarten, Ms Graves has broadened her job search and this week accepted a job at a clothing store. She feels overqualified, considering her seven years in administrative positions. But she is happy to work.
“They pay pretty decent for retail,” she said. “It was definitely a struggle and a journey. “
This story was reported by The Associated Press.