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  • Writer's pictureNick Andriacchi

Job Market Accelerates In October

Updated: Nov 15, 2021

Employers added 531,000 in the month of October, beating economists’ expectations. Government hiring was negative again which caused a bit of a drag on the top line number. When taken that into account, private employers created more than 600,000 jobs last month.


Even with the rebound, the Bureau of Labor Statistics’ survey of households in October showed job holders rising by 359,000, still leaving the employment level about 4.7 million below its pre-pandemic level. The labor force grew by just 104,000, which is not even enough to even keep pace with population growth.



Companies have been increasing wages and adding other incentives as the working share of the potential labor force operates well below its pre-pandemic level. Average earnings increased by 4.9% year-over-year is impressive, given that the Leisure and Hospitality jobs increase usually depresses earnings growth.


Analysis of the October Employment Report


· Temporary help ended its losing streak and grew by 41,100 jobs in October.


· A more encompassing measure of unemployment (U6) that includes discouraged workers and those holding part-time jobs for economic reasons dropped to 8.1% in October.


· The change in total nonfarm payroll employment for August was revised up by 117,000, from +366,000 to +483,000, and the change for September was revised up by 118,000, from +194,000to +312,000. With these revisions, employment in August and September combined is 235,000 higher than previously reported. (Monthly revisions result from additional reports received from businesses and government agencies since the last published estimates and from the recalculation of seasonal factors.)


· Prime age labor force participation rate (ages 25-54) was up this month at 81.7%. This number has been stagnant for a number of months and is still down by 1.4% since February 2020, the last month before the pandemic started.


· The overall labor force participation was flat at 61.6%.


· In October, average hourly earnings for all employees on private nonfarm payrolls increased by 11 cents to $30.96, following large increases in the prior 6 months. Over the past 12 months, average hourly earnings have increased by 4.9 percent. In October, average hourly earnings of private-sector production and nonsupervisory employees rose by 10 cents to $26.26.


· Average hourly earnings are up 4.9% from the same period a year ago, this reinforces that demand for labor is very strong.


· The average workweek for all employees on private nonfarm payrolls decreased by 0.1 hour to 34.7 hours. In manufacturing, the average workweek edged down by 0.1 hour to 40.3 hours, and overtime edged down by 0.1 hour to 3.2 hours. The average workweek for production and nonsupervisory employees on private nonfarm payrolls decreased by 0.1 hour to 34.1 hours.


· APD reported that 571,000 jobs were created in October


JOLTS Report November 12, 2021


Job Openings


· On the last business day of September, the number and rate of job openings were little changed at 10.4 million and 6.6 percent, respectively. Job openings increased in health care and social assistance (+141,000); state and local government, excluding education (+114,000); wholesale trade (+51,000); and information (+51,000). Job openings decreased in state and local government education (-114,000); other services (-104,000); real estate and rental and leasing (-65,000); and educational services (-45,000). The number of job openings was little changed in all four regions.


Hires


· In September, the number and rate of hires were little changed at 6.5 million and 4.4 percent, respectively. Hires increased in health care and social assistance (+109,000) and finance and insurance (+60,000). Hires decreased in state and local government education (92,000) and educational services (-89,000). The number of hires was little changed in all four regions.


Separations


Total separations includes quits, layoffs and discharges, and other separations. Quits are generally voluntary separations initiated by the employee. Therefore, the quits rate can serve as a measure of workers’ willingness or ability to leave jobs. Layoffs and discharges are involuntary separations initiated by the employer. Other separations includes separations due to retirement, death, disability, and transfers to other locations of the same firm.


· In September, the number and rate of total separations were little changed at 6.2 million and 4.2 percent, respectively. Total separations decreased in retail trade (-100,000). The total separations level increased in several industries with the largest increases in other services (+87,000); health care and social assistance (+86,000); and finance and insurance (+61,000). Total separations were little changed in all four regions.


· The number of quits increased in September to a series high of 4.4 million (+164,000). The quits rate also increased to a record high 3.0 percent. Quits increased in several industries with the largest increases in arts, entertainment, and recreation (+56,000); other services (+47,000); and state and local government education (+30,000). Quits decreased in wholesale trade (-30,000). The number of quits increased in the West region.


· In September, the number of layoffs and discharges was little changed at 1.4 million. The layoffs and discharges rate was unchanged at 0.9 percent. Layoffs and discharges were little changed in all industries and in all four regions.


· The number of other separations was little changed in September at 410,000. Other separations increased in finance and insurance (+41,000); state and local government education (+13,000); and other services (+12,000). Other separations were little changed in all four regions.


Net Change in Employment


Large numbers of hires and separations occur every month throughout the business cycle. Net employment change results from the relationship between hires and separations. When the number of hires exceeds the number of separations, employment rises, even if the hires level is steady or declining. Conversely, when the number of hires is less than the number of separations, employment declines, even if the hires level is steady or rising.


Over the 12 months ending in September 2021, hires totaled 73.3 million and separations totaled 67.7 million, yielding a net employment gain of 5.6 million. These totals include workers who may have been hired and separated more than once during the year.


Source: ADP, BLS, CNBC, ABC News


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