US non-farm payrolls beat forecasts in October
By Alexander Bueso
Date: Friday 05 Nov 2021
(Sharecast News) - US jobs growth and unemployment numbers for October both came in a bit better-than-expected, alongside big revisions to prior month´s data.
According to the Department of Labor, non-farm payrolls jumped by 531,000 last month, besting forecasts for an increase of 425,000.
Non-farm payrolls for the prior two months were revised higher by a combined 235,000 people and average hourly earnings improved at a month-on-month pace of 0.4%, with the latter being as expected.
Worth noting, the increase in private sector employment accelerated from 365,000 in September to 604,000 for October, driven by services and leisure and hospitality jobs in particular.
Payrolls in leisure and hospitality grew by 164,000, versus an 88,000 person gain in the month before.
The rate of unemployment meanwhile dropped by two tenths of a percentage point from the month before to reach 4.6%.
That was better than the decline to 4.7% anticipated by economists.
However, the labour force participation rate continued to languish at 61.6%, having roughly moved sideways since the initial half-recovery in the late spring of 2020.
According to economists at Barclays Research, the October numbers showed that the jobs market was emerging from its soft patch.
"In our view, the October numbers confirm that the US economy has turned the corner after this summer's soft patch, with diminishing infection risks from the Delta variant providing renewed momentum to service sector activity," they said.
They also noted how the only soft spot in the payrolls numbers was in government employment, where the bulk of the drop was accounted for by the fall in education employment by state and local governments, which they said had been "complicated of late by seasonal adjustment difficulties related to the pandemic".
Ian Shepherdson at Pantheon Macroeconomics was of a broadly similar view, further pointing out how the estimate for government job growth in September was marked up from a preliminary estimate of -123,000 to -53,000.
He also noted how private sector jobs growth had been "hammered" by Delta in August and September and was hopeful that labour force participation was set to rise, saying that he was "very hopeful" that most people who had been pushed out of the labour force by Covid would return "filling the 10M-plus job openings over the next few months and easing upward pressure in wages".
In his opinion, job gains of 1.0m-plus were "a good bet" for November and December.
Barclays was a bit more cautious on labour force participation, but told clients: "while this sluggishness has contributed to supply constraints, the FOMC will likely be content to let labor market adjustments play out a fair bit longer, with the PEUC and PUC programs shedding more than 8mn recipients, on a combined basis, since late August.
"With households' balance sheets generally in a solid position, sidelined workers can afford to be picky as they sort through employment opportunities, especially those who had been part of dual-earner couples."
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