Economy adds 531,000 jobs in October as COVID-19 cases drop, unemployment falls to 4.6%

Hiring rebounded sharply in October as COVID-19 cases tumbled while the reopening of most schools and expiration of unemployment benefits prodded some Americans to return to work.

The economy added 531,000 jobs, and the unemployment rate, which is calculated from a different survey, fell from 4.8% to 4.6%, the Labor Department said Friday.

Economists surveyed by Bloomberg had estimated that 450,000 jobs were added last month.

Also encouraging: Job gains for August and September were revised up by a total 235,000, depicting a far brighter picture of the labor market during the delta-variant-fueled COVID-19 spike the past two months.

The stronger-than-expected report provides a boost to President Joe Biden, who has seen his poll numbers slide recently in part because of rapidly rising consumer prices and related supply-chain snarls that have led to product shortages and slow deliveries.

At the White House, Biden said the jobs report shows that the economy is clearly on the rebound and that the recovery “is faster, stronger, fairer and wider than anyone could have predicted.”

Wall Street welcomed the news as the Dow Jones industrial average rising about 300 points in to 36,420 midmorning trading.

“The U.S. job market shook off its malaise in October as the impacts from Delta fade,” economist Leslie Preston of TD Economics wrote in a note to clients.

The U.S. has recovered 18.2 million, or 81%, of the 22.4 million jobs lost during the depths of the pandemic in the spring of 2020. That leaves the nation 4.2 million jobs below its pre-crisis level.

October’s payroll gains were broad-based.

Leisure and hospitality, the industry hit hardest by the pandemic, added 164,000 jobs, with restaurants and bars adding 119,000. Professional and business services added 100,000. Manufacturing added 66,000 in a sign supply-chain bottlenecks may be easing.

Transportation and warehousing added 54,000 jobs. Construction added 44,000 despite severe worker shortages and rising material prices. Health care added 37,000 and retail, 35,000.

Federal, state and local governments shed 73,000 jobs as public education jobs fell by 65,000 after seasonal adjustments. Labor partly chalked up the third straight large monthly drop to pandemic-related distortions of seasonal hiring and layoffs at schools.

Some economists said several factors likely coalesced last month to jolt a job market that had sputtered in August and September.

New daily COVID-19 cases have fallen by half since mid-September to about 70,000 – still well above the low of 12,000 in early July. And nearly 80% of people over 12 have been fully vaccinated.

Recently 1.7 million fewer people said they weren’t working because they feared contracting the coronavirus or were caring for sick friends or relatives, according to the Census Bureau’s most recent household pulse survey and Oxford Economics.

Meanwhile, in September, most schools reopened for in-person learning, which allowed many parents to rejoin the workforce, says Oxford economist Lydia Boussour. That month, federal unemployment benefits expired for 11 million people, nudging some to resume their job searches, Boussour says.

Those developments probably will continue to play out in coming months, she says, easing worker shortages that have crimped hiring this year despite a near-record 10.4 million job openings in August.

Although the factors likely meant a larger pool of applicants to some employers last month, their overall impact was modest. The number of Americans working or looking for jobs grew by about 100,000, but the share of all adults participating in that labor force was unchanged at 61.6%. 

Employers’ struggles to find workers are helping lift groups that traditionally have struggled to land jobs. The number of Americans out of work at least six months declined by 357,000 to 2.3 million and is down from 4.2 million in March.

One wild card is Biden’s mandate of vaccinations or testing for federal workers and employees at firms with 100 or more workers.

Economist Michael Pearce of Capital Economics said the requirement could worsen worker shortages, noting 4% of New York City education employees quit or lost their jobs after refusing to get vaccinated.

But Diane Swonk, chief economist of Grant Thornton, suggested the mandate could boost hiring by easing the health concerns of potential applicants.

“United Airlines was swamped with applications for 2,000 flight attendant positions after it put a vaccine mandate in place,” she wrote in a note to clients.

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Contributing: Michael Collins

Hiring was expected to pick up in October.