Government employment fell by 268,000 in October. The U.S. Census eliminated 147,000 temporary jobs, as expected, as it wound down the 2020 survey. The Census is conducted every 10 years.
State and local governments also cut jobs. Many schools have not fully reopened and there’s less need for bus drivers, cafeteria workers and other support staff.
The big decline in the unemployment rate, meanwhile, reflected a massive 2.2 million increase in the number of people who said they were employed in a separate household survey.
The household survey is more prone to sharp swings and revisions than the government’s survey of business establishments used to determine how many new jobs are created in any one month.
The Bureau of Labor Statistics said the jobless rate likely would have been 0.3% percentage points higher, or 7.2%, if all survey respondents had accurately described their employment status. Some workers whose jobs have likely been lost permanently still characterize themselves as employed.
Many economists also think the true level of unemployment is even higher. A broader measure known as U6 also fell in October but was a much higher 12.1%. Often called the “real” unemployment rate, the U6 includes discouraged jobseekers and those who can only find part-time work.
Also missing from the official unemployment rate are roughly 3.5 million workers who’ve dropped out of the labor force. They aren’t included.
The jobless rate had soared to a record 14.7% in April before receding.
Employment gains in prior months were little changed. The BLS said a revised 672,000 jobs were added in September and 1.49 million in August.
The big picture: Despite an October surprise of sorts, hiring has slowed and is likely to taper further in the next few months.
What’s worrisome is the high number of jobs that still haven’t been recovered. The end of massive federal aid in July and a record wave of coronavirus cases last month could make it harder for the economy to grow and let the companies harmed most by the pandemic get back to business.
Washington is likely to approve another financial aid package in the next month or two, and that will help, but only the prospect of coronavirus vaccine offers a full cure for what ails the U.S. economy.
What they are saying? “We should not expect to see anything nearly this strong in the months ahead, but it is encouraging nonetheless,” said money market economist Thomas Simons of Jefferies LLC.
“The recovery in the economy and the labor market remained on track in October,” said Joel Naroff of Naroff Economic Advisors. ” Can we keep it up? It is all about the virus, not any underlying weakness in the economy.”
Market reaction: The Dow Jones Industrial Average /zigman2/quotes/210598065/realtime DJIA +0.10% and S&P 500 index /zigman2/quotes/210599714/realtime SPX +0.15% fell in Friday trades. Stocks have rallied this week amid a U.S. election that will likely result in divided government and little change in economic policy in Washington.