US economy beats forecasts, adds 638,000 jobs in October as unemployment falls to 6.9%

Bryan Woolston/Reuters
  • The US Bureau of Labour Statistics on Friday said the country added 638,000 jobs in October, more than the 580,000 additions expected by economists surveyed by Bloomberg.
  • The figure signalled a decline from the revised 672,000 job additions seen in September.
  • The unemployment rate fell to 6.9% last month from 7.9%. Economists expected the rate to decline to 7.6%.
  • The reading marks the sixth straight month of job additions after the coronavirus pandemic drove outsize losses in April.
  • Still, the slowed pace of improvement suggests the labour market faces an uphill battle in returning to pre-pandemic levels.
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The US labour market rebounded further through October as job additions persisted, albeit at a weakening pace.

American businesses added 638,000 nonfarm payrolls last month, the Bureau of Labour Statistics announced Friday. The total landed above the 580,000 payroll additions expected by economists surveyed by Bloomberg, though it did mark a decrease from the revised 672,000 jobs added in September.

The US unemployment rate fell to 6.9% from 7.9%, according to the report. That was lower than the consensus economist estimate of 7.6%. The unemployment rate now stands at roughly half of the 14.7% peak seen at the economic trough of the coronavirus pandemic.

The Friday report marks the sixth straight month of job gains after the coronavirus crisis drove unprecedented losses in April. The unemployment rate, while still elevated, continues to trend lower as the broader economy recovers.

“While the economy has reclaimed 12 million jobs from the trough of the crisis in April, it has barely passed the halfway mark in what will be a gruelling marathon,” Gregory Daco, the chief US economist at Oxford Economics, said. “With employment still 10 million lower than pre-COVID levels, the worsening health situation and lapsing fiscal aid represent concerning obstacles.”


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Inside the numbers

The monthly report provides the clearest picture yet of how the labour market is rebounding from its virus slump. Some 15.1 million Americans attributed their joblessness to their employer ending operations because of the pandemic. That’s down from 19.4 million people in September.

Roughly 3.6 million Americans cited the pandemic as a primary reason for not seeking employment. The reading marks a decline from 4.5 million in September.

The proportion of Americans telecommuting fell to 21.2% from 24.3% through the month as businesses slowly called workers back to offices and factories.

The October report points to continued gains in the labour market after the pandemic fuelled the worst bout of nationwide joblessness since World War II. Yet the share of job losses has turned increasingly permanent, suggesting the economy will face significant scarring well after the US contains the pandemic. The number of temporary layoffs fell to 3.2 million Americans from 4.6 million in October.


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The bigger picture

Then there’s the issue of containing the pandemic. Daily new COVID-19 cases continue to spike to record highs across the country. With several European countries reinstituting lockdowns to curb the virus’ spread, some economists fear a similar measure in the US could reignite layoff activity and halt the economic rebound.

Other indicators of nationwide hiring suggest the pace of improvement is petering out. ADP’s October report showed the US adding 365,000 private payrolls, less than the 643,000 additions expected by economists. The total is also less than half the job additions seen in September.

The Wednesday ADP report was followed by a somewhat gloomy jobless-claims reading the day after. New filings for unemployment insurance dipped to 751,000 in the week that ended Saturday, according to the Labour Department. The reading fell below the 735,000 sought by economists and signalled a marked slowdown in week-over-week declines.

Continuing claims, which track the aggregate total of Americans receiving unemployment benefits, fell to 7.3 million for the week that ended October 24. That was slightly above economist expectations.

Those without jobs also face an increasingly tough economic backdrop. Congress failed to pass new stimulus ahead of the election, ensuring jobless Americans will go months without another round of relief payments or bolstered unemployment insurance. A potentially divided government in 2021 would also considerably shrink the size of a bipartisan stimulus measure.

Bolstered savings may also soon dry up. A Federal Reserve study published mid-October found the majority of funds from stimulus checks and unemployment insurance were used for paying down debts and savings.


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