After back-to-back disappointing months on the jobs front, the United States economy rebounded in October, adding 531,000 job, according to the Labor Department’s jobs report on Friday.
Additionally, the unemployment rate fell to 4.6% from 4.8% last month.
The report was much stronger for private companies, which added 604,000 jobs, as a loss of 73,000 government jobs pulled down the overall number. September’s figures were also revised upward to 312,000 jobs after the initial report estimated 194,000 jobs added.
Wages increased 0.4% for the month, in line with estimates, but rose 4.9% on a year-over-year basis, reflecting the inflationary pressures that have intensified through the year. The average work week edged lower by one-tenth of an hour to 34.7 hours.
“The pace of consumer spending is slowing, and supply-chain issues aren’t helping, especially with the holiday season upon us,” said Jay Denton, chief market labor analyst at ThinkWhy. “These factors, combined with current pressures on wages and a lack of available workers, not only will produce extra staffing challenges but [will] also impact revenues for many businesses."
The critical leisure and hospitality sector saw the most growth, adding 164,000 jobs as Americans ventured out to eating and drinking establishments and went on vacations again as COVID-19 numbers fell during the month. For 2021, the sector has reclaimed 2.4 million positions lost during the pandemic.
Other sectors posting solid gains included professional and business services (100,000), manufacturing (60,000), and transportation and warehousing (54,000). Construction added 44,000 positions, while health care was up 37,000 and retail added 35,000.
Despite the improved economic outlook that the report depicts, significant labor market concerns remain. Companies have been increasing wages and adding other incentives as the working share of the potential labor force operates well below its pre-pandemic level.
The onus remains on businesses to find creative ways beyond compensation to attract workers to fill the various labor shortages that still exist.
“Businesses will need to focus on retaining the talent they have, in addition to filling open roles,” Denton said. “Offering more money may not be enough in the current environment, because workers are looking for flexibility, remote and hybrid work, and other benefits.”