The Line: 531,000 Jobs Added in October

Gregory Heym is Chief Economist at Brown Harris Stevens. His weekly series, The Line, covers new developments to the economy, including trends and forecasts. Read on for the latest report and subscribe here to receive The Line in your inbox.

Employment rose by 531,000 last month, beating the consensus estimate of 450,000. The unemployment rate also beat expectations, falling from 4.8% to 4.6%. Here are some other interesting tidbits from the report:

• Job gains in August and September were revised up by a total of 235,000.

• Monthly job growth has averaged 582,000 this year.

• Average hourly earnings are up 4.9% over the past year—a strong number, but still less than the current rate of inflation.

• 11.6% of employees are working from home due to the pandemic, down from 13.2% in September.

• Leisure and hospitality (+160,000), and professional and business services (+100,000) added the most jobs in October.

• Government employment fell by 73,000 last month.

Perhaps the scariest finding in the report is that over the past year, employment in education has fallen by 370,000 at the local government level, 205,000 at the state level, and 148,000 in the private sector.

While this is a very good report, I have to say I’m still a bit disappointed the country isn’t adding more jobs. With over 10 million job openings out there, the expiration of federal unemployment benefits in September, and the Delta variant waning, I was expecting something closer to a million. But I’ll take what I can get, especially since the disappointing August and September figures were revised up sharply. The key number to remember here is 5.8 million, which is the number of jobs the U.S. has added so far in 2021. When was the last time we added that many jobs in the first 10 months of the year? How about never, or at least not since before 1939 when the BLS data starts.

As most economists predicted, the Fed announced last week that it would immediately start reducing its asset purchases by $15 billion per month until they reach $0. This would put the Fed in line to begin hiking rates in the second half of next year.

I have been very critical of the Fed’s inaction against the surge in inflation this year, and this action doesn’t do much to change that. Inflation is rising faster than wages, thus reducing the purchasing power of Americans and threatening to derail economic growth. Chairman Powell has stood by and done nothing about this, although at least he now realizes that inflation isn’t as "transitory" as he thought.

Let’s hope the Fed wasn’t too late to the party, or we will all pay the price.

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