# U.S. job growth regains momentum; worker shortages persist
Author:  Pal Sinha, Barnali 
Author URL: https://financedigest.com/author/pal-sinha-barnali
Published: 2021-11-05
Category: BUSINESS
Category URL: https://financedigest.com/category/business
Meta Title: U.S. Employment Gains Surpass Expectations in October
Meta Description: U.S. employment increased more than expected, offering evidence of economic momentum. Worker shortages persist despite benefits expiring and schools reopening.
URL: https://financedigest.com/u-s-job-growth-regains-momentum-worker-shortages-persisthtml

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By Lucia Mutikani

WASHINGTON (Reuters) – U.S. employment increased more than [expected in October as the headwind from the surge](https://www.financedigest.com/exclusive-german-govt-expects-inflation-to-surge-to-2-9-in-2021-source.html "Exclusive-German govt expects inflation to surge to 2.9% in 2021 – source") in COVID-19 infections over the summer subsided, offering more evidence that economic activity was regaining momentum early in the fourth quarter.

The Labor Department’s closely watched employment report on Friday still showed, however, that [worker shortages persisted even after federal government-funded unemployment benefits](https://www.financedigest.com/industries-with-the-most-workplace-accidents-and-workers-comp-benefits.html "Industries with the Most Workplace Accidents and Workers Comp Benefits") expired in early September and schools fully reopened. The [labor force participation rate](https://www.financedigest.com/dollar-firms-after-u-s-labor-data-suggests-more-rate-hikes.html "Dollar firms after U.S. labor data suggests more rate hikes") was flat.

Still, the broad-based gain in employment added to rising consumer confidence and services sector activity in painting a more favorable picture of the economy, after the Delta variant of the coronavirus and economy-wide shortages of goods restricted [growth in the third quarter to its slowest pace](https://www.financedigest.com/uk-recruiters-slow-pace-of-pay-growth-in-march-rec-survey-shows.html "UK recruiters slow pace of pay growth in March, REC survey shows") in more than a year.

“The one cloud on the horizon was the stubbornly depressed participation rate,” said Seema Shah, chief strategist at Principal Global Investors. At this point, with reduced benefits, a return to in-person schooling and the drop in COVID rates, we should be [seeing a recovery](https://www.financedigest.com/airline-body-iata-sees-industry-recovery-now-in-2023.html "Airline body IATA sees industry recovery now in 2023") in participation.

[Nonfarm payrolls](https://www.financedigest.com/dollar-tumbles-as-u-s-nonfarm-payrolls-show-mixed-picture.html "Dollar tumbles as U.S. nonfarm payrolls show mixed picture") increased by 531,000 jobs last month, the survey of establishments showed. Data for [September was revised](https://www.financedigest.com/spain-september-final-12-month-inflation-revised-down-to-8-9.html "Spain September final 12-month inflation revised down to 8.9%") higher to show 312,000 created instead of the previously reported 194,000. Economists [polled by Reuters](https://www.financedigest.com/bank-of-england-to-raise-rates-by-50bps-again-to-tame-inflation-reuters-poll.html "Bank of England to raise rates by 50bps again to tame inflation: Reuters Poll") had forecast payrolls rising by 450,000 jobs.

Employment is 4.2 million jobs below its peak in February 2020. [Job growth has averaged 582,000 per month this year](https://www.financedigest.com/inpost-sees-better-margin-in-poland-plans-no-job-cuts-this-year.html "InPost sees better margin in Poland, plans no job cuts this year").

Leisure and hospitality businesses led the increase in hiring last month, with 164,000 [jobs created](https://www.financedigest.com/italy-jan-jobless-rate-edges-up-to-7-9-with-35000-jobs-created.html "Italy Jan jobless rate edges up to 7.9%, with 35,000 jobs created"). Payrolls also rose in the professional and business services, transportation and warehousing, healthcare, wholesale trade, financial [activities as well as mining sectors](https://www.financedigest.com/dollar-slides-on-contraction-in-private-sector-activity.html "Dollar slides on contraction in private sector activity").

Manufacturing added 60,000 jobs, with 28,000 of the positions at motor vehicle manufacturers. Construction payrolls increased by 44,000 jobs.

But state and local government education [shed 65,000 jobs](https://www.financedigest.com/microsoft-to-shed-10000-jobs-adding-to-glut-of-tech-layoffs.html "Microsoft to shed 10,000 jobs, adding to glut of tech layoffs"). The government said pandemic-related staffing fluctuations in education have distorted normal seasonal patterns, making the changes in employment in the [sector challenging](https://www.financedigest.com/new-business-launches-to-support-it-professionalsfacing-mission-critcial-sector-challenges.html "NEW BUSINESS LAUNCHES TO SUPPORT IT PROFESSIONALSFACING MISSION CRITCIAL SECTOR CHALLENGES") to interpret. Shortages of bus drivers and other support staff have been well documented. Overall government payrolls fell by 73,000 jobs.

U.S. stocks [opened higher](https://www.financedigest.com/wall-street-seen-opening-higher-but-u-s-recession-priced-in.html "Wall Street seen opening higher but U.S. recession priced in"). The [dollar rose against a basket of currencies](https://www.financedigest.com/worst-not-over-for-em-currencies-as-u-s-dollar-thunders-on-reuters-poll.html "Worst not over for EM currencies as U.S. dollar thunders on: Reuters poll"). U.S. [Treasury prices](https://www.financedigest.com/stocks-jump-as-treasury-yields-ease-and-oil-prices-sell-off.html "Stocks jump as Treasury yields ease and oil prices sell off") were mixed.

MILLIONS REMAIN HOME

Details of the smaller survey of households were also upbeat, with strong employment gains. The [unemployment rate](https://www.financedigest.com/u-s-job-growth-powers-ahead-unemployment-rate-at-3-4.html "U.S. job growth powers ahead; unemployment rate at 3.4%") fell to 4.6% last month from 4.8% in September. Though 104,000 people entered the labor force last month, millions remained outside, making it harder for employers to fill 10.4 million [jobs which were open as of the end](https://www.financedigest.com/hp-to-cut-about-12-jobs-by-end-of-fiscal-2025.html "HP to cut about 12% jobs by end of fiscal 2025") of August.

The labor force participation rate, or the proportion of working-age Americans who have a job or are looking for one was unchanged at 61.6%. It has remained within a narrow range of

61.4% to 61.7% since June 2020. About five [million people](https://www.financedigest.com/the-start-up-using-technology-to-help-the-20-million-people-in-britain-with-money-worries.html "The start-up using technology to help the 20 million people in Britain with money worries") have left the labor force since the pandemic started.

The number of people unemployed for 27 [weeks or more dropped](https://www.financedigest.com/oil-prices-head-for-fourth-weekly-drop-as-demand-fears-weigh.html "Oil prices head for fourth weekly drop as demand fears weigh") 357,000 to 2.3 million. They accounted for 31.6% of the 7.4 million people officially unemployed [last month](https://www.financedigest.com/fintech-trends-to-look-out-for-during-the-last-six-months-of-2019.html "Fintech trends to look out for during the last six months of 2019").

The labor market disconnect has been blamed on caregiving needs during the pandemic, fears of contracting the coronavirus, [early retirements](https://www.financedigest.com/how-to-retire-early.html "How to retire early"), massive savings and career changes as well as an aging population and the recently ended expanded unemployment benefits. With many people who moved out of cities during the [pandemic yet to return](https://www.financedigest.com/boohoo-warns-on-outlook-blaming-higher-returns-and-pandemic-costs.html "Boohoo warns on outlook, blaming higher returns and pandemic costs"), there could also be a mismatch between the open jobs and location.

Federal Reserve Chair Jerome [Powell told reporters on Wednesday that “these impediments to labor supply should diminish with further progress](https://www.financedigest.com/dollar-falls-to-nine-month-low-as-powell-notes-progress-in-disinflation.html "Dollar falls to nine-month low as Powell notes progress in disinflation") on containing the virus, supporting gains in employment and economic activity.

The Fed announced it would this month start scaling back the amount of money it is pumping into the economy through [monthly bond](https://www.financedigest.com/investors-flee-uk-bonds-pushing-gilts-to-huge-monthly-loss.html "Investors flee UK bonds, pushing gilts to huge monthly loss") purchases.

There are concerns that the White House’s vaccine mandate, which comes into effect on Jan. 4 and applies to federal [government contractors and businesses](https://www.financedigest.com/local-government-business-support-getting-worse-report-shows-as-70-of-uk-firms-say-its-not-good-enough.html "Local government business support getting worse, report shows, as 70% of UK firms say it’s not good enough") with 100 or more employees, could compound the worker shortages.

There has also been a rise in [strikes as workers](https://www.financedigest.com/uks-royal-mail-workers-to-strike-in-run-up-to-christmas.html "UK’s Royal Mail workers to strike in run-up to Christmas") take advantage of the tight labor market to demand more pay and better conditions. The walk out by about 10,000 Deere & Co [workers had no impact on October’s payrolls as it started in the middle of the period during which the government surveyed households and businesses for the employment](https://www.financedigest.com/more-than-half-of-workers-are-open-to-leaving-their-current-employers.html "MORE THAN HALF OF WORKERS ARE OPEN TO LEAVING THEIR CURRENT EMPLOYERS") report.

The scramble for workers [continued to boost wage growth](https://www.financedigest.com/different-employee-engagement-outcomes-for-u-s-and-canadian-companies-amidst-continued-economic-growth-pressures.html "DIFFERENT EMPLOYEE ENGAGEMENT OUTCOMES FOR U.S. AND CANADIAN COMPANIES AMIDST CONTINUED ECONOMIC GROWTH Pressures"), with average hourly earnings rising 0.4%. That lifted the annual increased to 4.9% in October from 4.6% in September.

This, together with record savings should help to underpin consumer [spending over the holiday](https://www.financedigest.com/brits-spend-less-than-a-quarter-of-their-holiday-exploring-the-destination.html "Brits spend less than a quarter of their holiday exploring the destination") session, though salaries are lagging inflation and shortages of goods abound.

(Reporting by Lucia Mutikani; Editing by Chizu Nomiyama)


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