Economy Bounces Back with 261,000 New Jobs in October; Unemployment Rate Falls to 17-Year Low

By Mark Lieberman

Managing Director and Senior Economist

Highlights

  • Unemployment rate FELL in October to 4.1 percent, lowest since December 2000 when it was 3.9 percent;
  • Number of jobs INCREASED 261,000 in October;
  • Average weekly earnings FELL 35¢ to $913.63, a 2.4 percent year-year gain down from the 2.8 percent year-year increase in September;
  • The number of persons not in the labor force ROSE 962,000 – the sharpest increase since April 2014 – and the Labor Force itself FELL 765,000. The largest drop since October 2013
  • Average workweek REMAINED at 34.4 hours;
  • Prior month job totals REVISED UP 90,000: UP 51,000 in September turning a loss of 33,000 jobs to a gain of 18 and UP 39,000 in August to a revised growth of 208,000 jobs;
  • Private sector payrolls ROSE 252,000 in October; Government payrolls ROSE 9,000 with more than half of the increase (5,000 jobs) at the federal level;
  • Both employment and unemployment FELL in October: Employment (persons with jobs DROPPED 484,000 and unemployment FELL to 281,000
  • Number of food service jobs INCREASED 89,000 recovering almost all the 98,000 jobs lost following hurricanes Harvey and Irma
  • Number of construction jobs INCREASED 11,000, principally among residential specialty trade contractors;
  • Number of retail jobs FELL for the seventh time in eight months, down to 15.82 million, lowest since May 2016.

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Despite a rebound from a month ago, the Bureau of Labor Statistics monthly Employment Situation report still showed concerns about the nation’s labor market.

The 261,000 growth in payroll jobs brought the year-to-date monthly average of growth to 169,000, below the average growth of 192,000 for the first 10 months of last year.

To be sure, the unemployment rate fell to 4.1 percent, the lowest in almost 17 years, but the reduction was achieved by a drop in the entire labor force (made up of persons employed and unemployed). Employment (people with jobs) fell 484,000 – the largest month-month decline in four years – and unemployment dropped as well. Thus, arithmetic, not labor gains, accounted for the drop in the unemployment rate.

Average weekly earnings declined dropping the year-year growth in weekly earnings back to 2.4 percent, the lowest earnings pace in seven months.

Part of the reason for the slowdown in earnings growth can be found in the detail of the jobs increase. Almost 41 percent 106,000 of the new jobs came in the low-paying leisure and hospitality sector and 83.5 percent of those jobs were food service jobs. The average weekly earnings in the leisure and hospitality sector of $406.12 is less than half the average weekly earnings overall, $912.63.

The number of persons employed full-time dropped 23,000 while the number of part-timers fell 415,000. The number of multiple jobholders dropped 178,000, also contributing to an earnings decline.

The expected bounce back in the construction sector due to hurricane rebuilding efforts has yet to materialize with the number of construction jobs up just11,000. It took four-to-five months for the number of construction jobs to spurt following Superstorm Sandy in 2012. The number of construction jobs increased an average of 50,000 per month following hurricane Katrina.

While the overall unemployment rate dropped in October, among the major worker groups, the results were uneven. The unemployment rate for adult men fell 0.1 percentage point and for adult women dropped 0.3 percentage. But, the unemployment rate for teens jumped 0.8 percent to 13.7 percent and for blacks or African-Americans (BLS terminology) 0.5 percentage points to 7.5 percent.

The weak earnings growth had an immediate impact: in perhaps an omen for holiday shopping, the number of retail jobs declined in October as several major retail chains have announced plans to reduce or eliminate holiday hiring.

Hear Mark Lieberman every Friday morning at 6:20 am on The Morning Briefing on POTUS on Sirius-XM 124. You can follow Mark Lieberman on Twitter at @foxeconomics.

 

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