Drop in Jobless Rate Shows Healing U.S. Labor Market

The U.S. labor market regained another chunk of jobs lost during the pandemic-induced recession, sending unemployment down sharply in October amid other signs the economy is recovering.

Employers added 638,000 jobs last month — the sixth straight monthly gain — and the jobless rate fell a percentage point to 6.9%, the Labor Department said Friday. The job market has now recovered 12.1 million of the 22 million jobs lost in March and April, when the shutdown of businesses led the jobless rate to soar to a post-World War II high of 14.7%.

October’s job gain would have been higher without the release of temporary census workers from public payrolls. Private-sector employers added 906,000 jobs last month, a pickup from September, more than offsetting a drop of 268,000 jobs in the public sector. Industries that hired the most workers last month included leisure and hospitality — particularly restaurants — retail and construction.

Still, job growth has slowed each month since June. And optimism about Friday’s report — which was derived from surveys in mid-October — was tempered by more recent data showing falling employment at small businesses and slower hiring in service industries overall.

The recent rise in virus infections, the fading effects of federal relief measures and the onset of winter — which could force patrons indoors — are likely to weigh on the labor market recovery, economists say.

“In normal times getting 600,000 jobs on a monthly basis would be great, ” said Gregory Daco, chief U.S. economist at Oxford Economics. “But in this environment you’re still looking at a recovery that’s going to take a couple of years to get us back out of this hole. If job growth moderates further then we’re talking about three or four years, and that’s a very long time.”

Mr. Daco noted that temporary workers accounted for one in six new jobs last month, a sign employers remain cautious about the outlook.

The report came as the nation awaited results of Tuesday’s elections, which will determine federal economic policies in coming years, including on taxes, spending, regulation, health care and labor issues.

The economy overall has rebounded quickly from the recession. Gross domestic output grew a record 7.4% in the third quarter — or at a 33.1% annual rate — the Commerce Department said last week. Activity in the manufacturing and service sectors rose in October, according to closely watched surveys by the Institute for Supply Management, a private data firm. U.S. consumers have stepped up spending, Commerce Department data show.

Yet there remains a lot of lost ground to recover. U.S. output remains 3.5% below where it was at the end of last year. The unemployment rate and the 11 million workers counted as jobless in October are both roughly twice pre-pandemic levels. Millions of other workers remain on the sidelines after having fallen out of the labor force early this year.

Friday’s report hinted at the unique “K” shape of this recovery, with some industries and workers advancing while others face a worsening situation. More than a million workers last month joined the ranks of the “long-term unemployed” — those without a job for at least 27 weeks — bringing the total to 3.6 million.

Overall, unemployment rates declined among all major demographic groups. But some have recovered faster than others compared with February. Jobs held by Hispanic men, for example, are 4.7% lower than in February, before the pandemic restricted much economic activity, while jobs among Hispanic women are down 9.5%.

Some industries and workers have mostly recovered from the recession. Boston Scientific Corp., which makes medical devices such as defibrillators, stents and pacemakers, furloughed most of its factory employees this spring, when the pandemic caused hospitals and patients to put off routine procedures. Then, this summer, the company brought back all of its workers, as patients started undergoing procedures they had put off, pushing up Boston Scientific’s business. The company is expanding again, said Brad Sorenson, Boston Scientific’s senior vice president.

The company has hired and trained dozens of workers for its factory in Spencer, Ind. It recently started recruiting immigrant workers in the state and nearby Pennsylvania, including many who had been working in the decimated hospitality and tourism industries.

“Hospitals have learned to bifurcate their business — they’ve learned how to manage Covid treatment in parallel with treating the rest of their patients,” Mr. Sorenson said. “We’re seeing hospitals have learned to be able to continue to deal with other treatments and procedures.”

The labor market faces several potential obstacles that could slow the expansion. The rise in virus infections could prompt cities and states to shut down businesses again and consumers to stay at home, cutting their spending on services.

Winter weather could also hurt industries such as restaurants that have been serving patrons outside. And the looming expiration of emergency jobless benefits could cause consumers to reduce spending, in turn pressuring employers to reduce costs by laying off employees.

Among the hardest hit could be restaurants, which were among the first to rehire but could be the first to lay people off if the economy deteriorates. Restaurant hiring accounted for some of the biggest overall job gains last month.

Early this summer, Sarah Thompson and Henji Cheung reopened their restaurant, Queen’s English, which serves modern Hong Kong cuisine and wines in the Columbia Heights neighborhood of Washington, D.C. Their staffing level is up to 10 people, down just two from before the pandemic. Because the restaurant itself is small, just 1,400 square feet, it has been serving diners exclusively outside.

But as winter sets in, the restaurant is preparing to temporarily close — perhaps for a month or two early next year, if the weather gets too cold — and lay off workers.

“We’re just telling everybody on payroll, ‘Hey do not spend your money,’ because most likely we will be closed for the month of January,” Ms. Thompson said.

The Walt Disney Co. said last month it would lay off 11,350 workers, most of them part-time, at Disney World in Orlando, Florida by the end of the year. Food-service contractor Aramark announced layoffs of 975 workers in Denver, most of them concession-stand workers at Coors Field, the baseball stadium for the Colorado Rockies.
Source: Dow Jones