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The U.S. jobs market snapped back in October, with nonfarm payrolls rising more than expected while the unemployment rate fell to 4.6%, the Labor Department reported Friday.
Nonfarm payrolls increased by 531,000 for the month, compared to the Dow Jones estimate of 450,000. The unemployment rate had been expected to edge down to 4.7%.
Private payrolls were even stronger, rising 604,000 as a loss of 73,000 government jobs pulled down the headline number. October’s gains represented a sharp pickup from September, which gained 312,000 jobs after the initial Bureau of Labor Statistics estimate of 194,000 saw a substantial upward revision in Friday’s report.
The critical leisure and hospitality sector led the way, adding 164,000 as Americans ventured out to eating and drinking establishments and went on vacations again as Covid numbers fell during the month. For 2021, the sector has reclaimed 2.4 million positions lost during the pandemic.
The report comes amid heightened concerns about the state of the labor market, particularly a chronic shortage that has left companies unable to fill positions to scale back production and cut hours of operation.
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.
Since adding more than a million jobs in July, the labor market has slowed down sharply, with sizeable letdowns in August and September as economists greatly overestimated growth in both months.
At the same time, the U.S. economy is slowing down. Gross domestic product increased just 2% in the summer months, falling short of even the reduced expectations for gains during the pandemic-era recovery.
Recent data, though, has shown a progressive drop in weekly jobless claims, the result in good part from enhanced unemployment benefits expiring. Data Thursday showed productivity is running at a 40-year low and the trade deficit notched another record high, passing $80 billion for the first time.
Earlier this week, the Federal Reserve said job growth is strengthening enough for the central bank to begin cutting its monthly bond purchases, a cornerstone of its efforts to boost the economy during the pandemic. However, Chairman Jerome Powell stressed that the picture must continue to improve before the Fed starts raising interest rates.
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