U.S. jobs are coming back, according to the payroll report released on Friday morning by the U.S. Bureau of Labor Statistics (BLS).
In October, the U.S. economy shifted on a higher gear, creating 531,000 new jobs, up from a revised 312,000 jobs in September and ahead of market expectations of 450,000 jobs.
The unemployment rate edged lower in October to 4.6%, with the number of long-term unemployed (those jobless for 27 weeks or more) decreasing by 357,000 to 2.3 million, still 1.2 million higher than in February 2020.
Most of the job gains were in the private sector, in industries benefiting from the re-opening of the U.S. economy, like leisure and hospitality, followed by professional services. (See Insiders’ Hot Stocks on TipRanks)
Labor Market Is Gaining Momentum
The new jobs figure, the largest in the last months, is consistent with two other reports published this week. On Thursday, the BLS reported that the number of jobless people who filed for unemployment benefits dropped to 269,000 in the week ending October 30 of 2021, from 283,000 in the previous week. In addition, on Wednesday, ADP, a private agency, reported that America’s private businesses hired 571,000 workers in October of 2021, up from 568,000 in September.
Substantial job gains indicate that the U.S. labor market is gaining momentum, easing concerns about labor supply constraints preventing Americans from getting jobs.
A Couple of Sticky Areas
While the U.S. labor market is improving, there are a couple of sticky areas worth watching, like average hourly earnings, which increased at an annual rate of 4.9%, up from 4.6%, adding to inflation fears.
Then there’s the labor force participation rate, which remained at 61.6% in October, very close to where it has been since June 2020. However, the participation rate is 1.7 percentage points lower than in February 2020. The employment-population ratio remained at 58.8%, still below the figure of 61.1 in February 2020.
Wall Street Liked What it Saw
These sticky points aside, Wall Street liked what it saw. Stronger job growth bonds well with robust consumer spending, setting the economy into a virtuous cycle where the labor sector and the goods and services sectors support and reinforce each other.
That’s good news for listed companies that sell these goods and services to consumers. Thus, the big rally in the economically sensitive indexes like the Dow Jones, which was up 260 points in late morning trade.
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