Implications: The job market is continuing to recover at a robust pace from the COVID-19 disaster. Nonfarm payrolls rose 638,000 in October versus a consensus expected 580,000. More importantly, private-sector payrolls rose 906,000, easily beating the consensus expected 680,000. As in September, the key drag on job creation was in the government, where temporary Census jobs went away and school systems employed fewer workers than is typical this time of year. It's also important to recognize that average weekly hours in the private sector ticked up (again!) to 34.8 in October versus an originally reported 34.7 in September, the equivalent of about 350,000 jobs. In other words, the details in the payroll report suggest on ongoing rapid recovery in the demand for private-sector workers. Civilian employment, an alternative measure of jobs that includes small-business start-ups, increased 2.2 million in October. After peaking in February, nonfarm payrolls plummeted by 22.2 million in March and April. In the past six months, payrolls have grown 12.1 million, making up 54% of the jobs lost earlier in the year. Over the same timeframe, civilian employment has recovered 65% of the jobs lost earlier this year. The best news in today's report was the drop in the unemployment rate to 6.9%, which is still a high level but well below the peak of 14.7% in April. Average hourly earnings rose a modest 0.1% in October but are up 4.5% from a year ago. Total earnings, which we calculate by multiplying average hourly earnings by the number of hours worked, rose a healthy 0.9% in October. Although total earnings are down 0.9% from a year ago, they dropped steeply early this year and have since recovered 80% of those losses. The road to a full recovery remains a long one. It's not just a matter of getting back to the level of jobs we had in February because, in the absence of the shutdowns related to COVID-19, jobs would have been rising since then. We think a full recovery means getting back to an unemployment rate of 4.0% or below, which is where it was before COVID-19. And that looks like it won't happen for at least a couple more years. That said, there should be no doubt we are headed in the right direction.
Click here for PDF version