U.S. Jobs: Recovery Continues, Outlook Slightly Rosy

It's the first Friday of the month for November, so it's time to ingest, ponder and react to the latest Employment Situation Summary from the U.S. Bureau of Labor Statistics. On the whole, I'm pleasantly surprised by this report — it's not as bleak as it could have been, and that qualifies as good news in 2020. Let's get into it!

To start with, the slope of prior job declines from June through September (see my chart in last month's U.S. employment analysis) strongly suggested that the decline from September to October might be greater than the actual difference between 672,000 jobs added (last month's number, adjusted) and 638,000 jobs added (this month's number, just reported). This comes to 34,000, or a drop of fewer than 5 percent.

Given the pandemic surge that's been banging away at businesses large and small over the past month, I'm inclined to say, "It could have been worse ... much worse!" This month's report also explains the decline in unemployment from a 1.5 million-person drop in the number of unemployed to a total of 11.1 million.

Those numbers, however, remain nearly double the figures from last February, which were 3.5 percent versus 6.9 percent, and 5.8 million versus 11.1 million, respectively. Things are definitely moving in the right direction, but the recovery slowdown continues — though it too, seems to be getting a bit less gradual.

The trend line for June to September could easily have had the October jobs added number falling to as low as 300,000 jobs or thereabouts. All I can say in response is that 1) a reduction in the number of jobs added of 34,000 beats a reduction of 361,000 every time, and 1) the relatively modest drop of 34K that did manifest may show that the curve is flattening.

Who knows? The recovery may actually be catching its breath, before turning the other way toward faster job growth rates. We'll have to wait and see.

Where Are New Jobs Popping Up?

According to the report, October's job gains occurred mostly in leisure and hospitality, professional and business services, retail trade, and construction. As you'd expect for the month when the U.S. Census ceased counting for its decennial effort, government employment was down.

Here's some more detail on jobs added and lost, from the latest summary report:

Leisure and hospitality jumped by 271,000 jobs for October, with most of that in food services (192,000). Other growth areas included arts, entertainment, and recreation (44,000) and accommodations (34,000). The sector has clawed back 4.8 million jobs since February, but still remains down by 3.5 million from February levels.

Professional and business services added 208,000 jobs in October. Temporary help services (109,000) accounted for just over half that total, with services to buildings and dwellings (19,000), computer systems design and related services (16,000), and management and consulting services (15,000) all up slightly. Employment in this sector is still 1.1 million below its February count.

Retail trade added 104,000 jobs, with about one-third for electronics and appliance stores (31,000). Other upward bound sub-sectors included motor vehicle and parts dealers (23,000), furniture and home furnishings (14,000), clothing and clothing accessories (13,000), general merchandise outlets (10,000), and finally, nonstore retailers (9,000). This sector remains 499,000 below its February count.

Construction grew by 84,000 jobs, including specialty contractors for nonresidential (28,000) and residential (18,000). Heavy and civil engineering construction and building construction were each up 19,000. Though construction has recovered 789,000 jobs since March, employment remains down by 294,000 from February levels.

Other modest gainers included health care and social assistance (79,000), transportation and warehousing (62,000), other services (47,000), manufacturing (38,000), financial activities (31,000). Remaining sectors — including our home sector of Information — were mostly flat for October.

As mentioned above, Government lost 268,000 jobs for October, of which 147,000 were temporary census workers. Local and state government education also continued to decline (98,000 for local, and 61,000 for state) in keeping with reduced teaching staff for COVID-affected schools, colleges, and so forth.

Where Do We Go from Here?

What do I see in these tea leaves? As in September, the recovery is pretty broad but fairly thin. Many of the jobs added are the kind that are easy to lose if the economy makes a sharp turn in the wrong direction. Though small gains in  professional services, construction and manufacturing make things look a bit rosier, these segments can also contract as quickly as they expand.

In other words, I don't see a lot of permanent, full-time jobs with benefits and a definable career path in most of this mix. When we start seeing more of those kinds of jobs, then we'll know we're turning a more significant corner and the recovery is strengthening.

All this said, this report is a bit of balm and calm as the nation waits, chewing its fingernails, for the outcomes of the Nov. 3 elections. This makes the December jobs report of great potential interest. Stay tuned: I'll be covering that one, too!