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Employment: Solid Gains, Details and Revisions Even Better

November 5, 2021
Bottom Line:  Payroll employment in October rose more than expected, up 531k, and there were positive revisions of more than 230k to August and September's disappointing readings. Confirming reports from other leading indicators, construction and manufacturing job growth was strong. And services sector hiring was broad, led by leisure and hospitality jobs. Moreover, seasonal adjustments in October appear to have skewed the reported job gains in the education sector lower again, without which October would have looked even more robust.
The unemployment rate fell two-tenths to 4.6% as labor force participation fell slightly. The only hint of concern in this report was that the participation rate remains low. That said, the employment-to-population ratio ticked higher and continued to trend in the right direction.  Average hourly earnings were up 0.4%, and while slower than in September, it might be even more impressive given how broad the hiring was. Hours worked fell slightly, but that should be expected as overall hiring grows.
Overall, this was a solid report and could have been even stronger if it weren't for the seasonal adjustments for school hiring. Moreover, the revisions to the previous reports, which were surprisingly weak, were a good sign. Looking through the volatility and seasonal adjustments, the three-month trend of 442k jobs appears likely to accelerate to the 5-600k range after this period of complex seasonal adjustments, in line with the trend that Fed Chair Powell mentioned in the Fed press conference.
Payroll Employment rose by 531k in October, compared with market expectations for an increase of 450k. The prior 2 months were revised, higher in September by 118k and higher in August by 117k.
Government jobs FELL by 73k. Consequently, private sector jobs ROSE by 604k.   Overall employment is now 4.1% ABOVE its year-ago level. Over the past 12 months, 5,774k jobs have been created. In October, the job gains were in
  • Trade, Transportation & Utilities (+69k with 35k of those in Retail Trade),  
  • Professional & Business Services (+100k with the addition of 41.1k in Temp Help Services),  
  • Leisure & Hospitality (+164k),
  • Manufacturing (+60k),
  • Education & Health Services (+47k),
  • Construction (+44k),
  • Other Services (+33k), and
  • Financial Activities (+21k).
Jobs were shed in Government (-73k). 
The Unemployment Rate FELL by 0.2 percentage points in October to 4.6%, compared with market expectations for a small decline to 4.7%.  Household employment rose by 359k while the labor force increased by 104k, resulting in a decrease in the number of unemployed of 255k.
The Labor Force Participation Rate was UNCHANGED at 61.6%.
The Employment-Population Ratio ROSE by  0.1 percentage points to 58.8%.
The number of people Working Part-Time for Economic Reasons FELL by 78k to 4,328k. while Long-Term Unemployment FELL by 357k to 2,326k (accounting for 31.4% of the unemployed),  while the Mean Duration of Unemployment FELL by 1.7 weeks to 26.7 weeks.
There are now 7.4 million people officially unemployed. In addition, there are another 5,978k people who say they want a job but are not currently looking for one.  Finally, another 4,328k people are working part-time because of slack economic conditions.
The Index of Aggregate Hours ROSE by 0.2%, combining the moderate gain in private payroll employment and the shorter workweek.
Hourly Earnings ROSE by 0.4% in October, below market expectations of 0.4%. Hourly earnings are now 4.9% ABOVE their year-ago level.
Weekly Earnings also ROSE by 0.1%, the result of the change in hourly earnings and a shorter workweek. Weekly earnings are now 4.6% ABOVE their year-ago level.
The Average Workweek FELL by 0.1 to 34.7 hours, in line with the market consensus at 34.7 hours.