Labor Force Growth Is Key
- The private sector added 571,000 jobs in October, according to a report from ADP. Gains were solid across industries and firm sizes.
- PNC expects job growth of 475,000 when the BLS releases the government’s official jobs report for October, with the unemployment rate rising slightly to 4.9%.
- More people returning to the labor force will be key to job growth throughout 2022.
The U.S. economy added 571,000 private-sector jobs in October, according to a report based on records from payroll-processing firm ADP. The Bureau of Labor Statistics releases the federal government’s official October jobs report on Friday, and PNC expects it to report job growth of 475,000, including an increase of 400,000 from the private sector. The strong ADP jobs report adds upside potential to BLS job growth in October. Private-sector job growth was 523,000 in September, according to the ADP National Employment Report.
Goods-producing industries added 113,000 jobs in October, according to the ADP report, with gains of better than 50,000 in both construction and manufacturing. Private service-providing industries added 458,000 jobs in October, with a big gain of 185,000 in leisure/hospitality services. There were also increases of 88,000 in professional/business services, 78,000 in trade/transportation/utilities, and 56,000 in education/health services.
Businesses with fewer than 50 workers added 115,000 jobs over the month, with firms with 50 to 499 workers added 114,000 jobs. The largest firms added 342,000 jobs in October.
The ADP jobs report for October was solid, with the strongest private-sector job gains since June. Job growth appears to be picking up in late 2021 as coronavirus cases start to once again decline. Hiring was especially strong in leisure/hospitality services, which the pandemic hit extremely hard.
National job growth was disappointing in September, according to the BLS, with the economy adding only 194,000 jobs over the month. Some of that was likely due to the late summer/early fall resurgence in coronavirus infections, and some to supply-chain difficulties. But there was also a big drop of 144,000 in local government education employment over the month, probably because of seasonal-adjustment issues in the data and not real softness. And other data points in the BLS September jobs report were better than the headline number indicated. Thus, underlying job growth likely remains solid, although down from its pace in the middle of this year.
In addition to job gains of 475,000 in October, PNC expects that the unemployment rate rose slightly to 4.9% last month with an increase in the labor force. The labor force-the number of adults working or looking for work-will be an extremely important indicator in the months ahead. In September it was smaller by about 3 million compared to before the pandemic, making it extremely difficult for many employers to find workers, despite strong demand for labor. If job growth is to pick up from its recent slowdown and the labor market is to return to its pre-pandemic state, more previously employed workers need to return to the job market.
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