US job growth back on track
Worker shortages in many sectors pushing up wages and inflation
published : 5 Nov 2021 at 19:59
writer: Bloomberg and Reuters
WASHINGTON: The US labour market got back on track last month with a larger-than-forecast and broad-based gain in payrolls, indicating greater progress filling millions of vacancies as the effects of the Delta coronavirus variant faded.
Nonfarm payrolls increased 531,000 in October after large upward revisions to the prior two months, a Labor Department report showed on Friday. The unemployment rate fell to 4.6% from 4.8% a month earlier, while the workforce participation rate was unchanged.
The faster pace of hiring shows that more Americans returned to workplaces as Covid cases declined and employers offered higher wages. Some of the growth may have also come after an estimated 7.5 million people lost federal expanded unemployment benefits on Sept 6.
Payroll gains last month were led by an increase of 164,000 positions in the leisure and hospitality sector. Professional and business services, transport and warehousing, and manufacturing also posted significant increases. Government payrolls fell.
Average hourly earnings rose 4.9% in October from a year ago, the most since February. The increase underscores workers’ ability to demand higher pay amid an ongoing labour shortage.
Higher wages could mean that more businesses will have to raise prices to protect margins as the costs of labour, materials and transport climb, stoking inflation. Prices have increased by the most in three decades on a year-over-year basis, driven by supply chain bottlenecks and shortages.
“We have high inflation and we have to balance that with what’s going on in the employment market,” Federal Reserve chairman Jerome Powell said on Wednesday following the Fed’s policy meeting. “It’s a complicated situation.”
The gain in October leaves payrolls 4.2 million below their pre-pandemic level. The pace of hiring in the coming months also risks being restrained by new Covid flare-ups. Recent data show hospital admissions increasing in 13 states, which could signal another virus wave.
While companies desperately want to hire, millions remain unemployed and outside the labor force.
This labour market disconnect has been blamed on a number of factors, among them caregiving needs during the pandemic, fear of contracting the coronavirus, early retirements, massive savings and career changes, as well as an ageing population and the expanded unemployment benefits.
With many people who moved out of cities during the pandemic yet to return, there could also be a mismatch between open jobs and the location of workers.
There were 10.4 million unfilled jobs as of the end of August, data show. About 5 million people have left the labour force since the pandemic started.
Business leaders have acknowledged that finding workers has become one of their biggest challenges as economic activity returns to normal across the US.
“It does feel like there’s more options for hourly employment and because of that, that’s putting pressure on the labour markets and hiring for the roles that we need,” Kimberly-Clark Corp CEO Michael Hsu said recently.