Job growth stronger than expected in October, unemployment rate slides to 6.9%


Employment growth was better than expected in October and the unemployment rate fell sharply even as the U.S. faces the challenge of surging coronavirus cases and the impact they could have on the nascent economic recovery.

The Labor Department reported Friday that nonfarm payrolls increased by 638,000 and the unemployment rate was at 6.9%. Economists surveyed by Dow Jones had been looking for a payroll gain of 530,000 and an unemployment rate of 7.7% a touch lower than the September level of 7.9%.

October’s gain was just slightly off the September pace of 672,000.

The jobless rate decline was positive as it came with a labor force participation rate that rose 0.3 percentage points to 61.7%. An alternative measure that includes discouraged workers and those holding part-time jobs for economic reasons also declined, to 12.1% from 12.8% a month ago.

The report comes as the U.S. this week broke the 100,000-a-day barrier that pushed a rise in both hospitalizations and the death rate.

With Federal Reserve officials stressing the link between the virus and economic growth, the U.S. faces challenging months ahead.

October’s growth brings the total payroll gains since May to around 12 million, though that still leaves unfilled about 10 million positions lost in March and April.

The biggest job gains came in the hardest-hit sector during the pandemic, as leisure and hospitality jumped by 271,000. Of that total, bars and restaurants increased 192,000.

Professional and business services rose 208,000 and retail added 104,000, mostly in electronics and appliance stores, which were up 31,000.

Construction also posted a healthy gain, up 84,000, while transportation and warehousing increased by 63,000 and manufacturing were up by 83,000, even though the sector remains well below its pre-pandemic level.

October’s gains would have been even better being it not for the loss of 147,000 Census workers that contributed to an overall decline of 268,000 in government jobs.

Previous months’ gains saw slight upward revisions, with August increasing by 4,000 to 1.493 million and September increasing by 11,000 to 672,000.

U.S. employers hired the fewest workers in five months in October, offering the clearest evidence yet that the end of fiscal stimulus and exploding new COVID-19 infections were sapping momentum from the economic recovery.

FILE PHOTO: People wait in line to enter the Nassau County Mega Job Fair at Nassau Veterans Memorial Coliseum in Uniondale, New York, U.S. October 7, 2014. REUTERS/Shannon Stapleton

Nonfarm payrolls increased by 638,00 last month, versus expectation of 600,000 and a 672,000 gain in September. The unemployment rate fell to 6.9% from 7.9% in the prior month.



STOCKS: Equity index futures sharply pared losses, with S&P 500 e-minis down 9.25 points, or 0.26%BONDS: U.S. Treasury yields rose, with benchmark 10-year notes last down 10/32 in price to yield 0.8101%, from 0.778% late on Thursday.FOREX: The dollar index remained weaker and was last down 0.405%



“The numbers were much better than I expected. The participation rate is really the reason for the sharp drop in the unemployment rate.”

“But the numbers are good, they’re reflecting people going back to work. But the future numbers will be subject to the coronavirus, which is spreading like wildfire. There’s a good chance, if we don’t get government help, this could be a temporary blip.”

“Nevertheless, the report beat expectations in a big way. Futures have come back. Will they go to the plus side? We’ve had four straight days of gains and we could be looking at a contested election, which adds to the uncertainties.”


“The number of jobs created in October was higher than expected, with many of the measures showing underlying strength.

Still, it should be noted that the level of job creation is slowing, and taken together with initial jobless claims also bottoming out, suggest that the labor market’s recovery is starting to become more uneven. Some of this may due to the rise in COVID-19 cases and related containment measures.

“For now, the increase in jobs will be enough to keep a floor under consumption and the broader economy, but the coming winter months will be important to watch.”


“The 638,000 rise in non-farm payrolls in October is stronger than it looks as it included a 147,000 drop in temporary census employment and, alongside the big fall in the unemployment rate, it suggests that the labor market recovery still has plenty of momentum.”

“While the drop in unemployment was again mainly driven by temporarily laid-off workers returning to their old jobs, the number of permanent job losers also fell back slightly, with the permanent unemployment rate still well below the post-financial crisis peak. That could be a crucial sign that the longer-term damage from the pandemic will not prove as severe as many had feared.”

“Admittedly, with the odds of a big fiscal stimulus package seemingly lower following Tuesday’s elections and the latest wave of coronavirus infections showing no signs of slowing, the balance of risks to the near-term outlook is starting to shift to the downside. For now, however, employment growth looks set to slow only gradually from here, keeping the unemployment rate on a downward trend.”


“Generally, the data was all quite strong, although the headline payroll number was held down by a big drop in government employment. But all the private data was strong.”

“It raises prospects for fourth-quarter growth. It’s clearly a good sign for the economy, so it would put upward pressure on (Treasury) yields.”


“I thought this was a very good report. Not only did the jobs come in higher, but the unemployment rate was down sharply which makes for a good headline number and I was surprised at how strong it was.

“It’s definitely good news.”


“It was better than I expected, particularly the private sector payrolls. But overall, it was a very encouraging report. Private payrolls at what 906,000 is so much higher than what the consensus had. That’s leisure and entertainment coming back.”

“The unemployment rate was also very encouraging, dropping down to 6.9%, despite the fact that there was a stronger-than-expected increase in the labor force participation rate.”

“The job market is pretty broadly recovering and recovering better than most forecasters have expected. The same thing could be said for consumer demand, manufacturing activity, homebuilding and other facets of the economy. So, it certainly adds to that good recovery narrative.”

JJ KINAHAN, chief market strategist at TD Ameritrade in Chicago

“Six straight months of good jobs gains, seeing the leisure places lead the way was kind of a nice thing but I hate to throw a little cold water on that but it seems like we are heading into a lot of states on lockdown about to come up too so it will be very interesting to see how that plays forward. Professional business services, that is big to see that rally, and construction was quite a surprise. To see those jobs coming back is really, really good. Personally, I was very surprised by that one. The fact is, yes it is only 638,000 jobs, but 783,000 of them were private-sector jobs.”

“Some of these were expected losses, particularly the census jobs in terms of what we lost in government, so it’s a brighter picture actually than the headline number.”

“I would expect the volatility in this number to continue to be off the charts. But construction, manufacturing and transportation, and warehousing all really nice gains and those are three backbones to the economy.”

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