Jobs Report and the Monthly Employment Growth Statistics
Why 638,000 Million Jobs Were Added in October
The U.S. economy gained 638,000 jobs in October. The pace of economic recovery has slowed slightly since September when the U.S. Bureau of Labor Statistics (BLS) reported a 672,000 job gain.
October's gains were the smallest since the economy lost a record 20.8 million jobs in April when businesses shut down to slow the spread of the COVID-19 pandemic.
At the same time, October's gain was much greater than prior to the pandemic when the economy was adding around 200,000 jobs a month. The big swings in job losses and job gains in 2020 reveal the tremendous impact the pandemic has had on the U.S. economy.
As the chart below shows, job gains have decreased significantly since June 2020.
Where Jobs Were Added
Leisure and hospitality added 271,000 jobs, which was less than the 406,000 job gain in September. The industry's been adding jobs after losing more than 5.7 million jobs between March 15 and April 18. The sector typically added 5,000 to 40,000 jobs before the pandemic.
Temporary help services added 108,700 jobs. Companies add temporary workers when they aren't sure they will need permanent positions. That's especially true during the early stages of recovery.
The retail industry added 103,700 jobs, a significant jump from September's 23,4000 added jobs. Wholesale, which usually trends with retail, broke from that trend and added 6,400 jobs, compared to 18,900 in September. Transportation and warehousing added 63,200 jobs.
The pandemic further damaged an already weakened retail sector. Store managers have been slashing jobs since March 2017. Online sales have cut into brick-and-mortar store sales. That's been especially true during shelter-in-place.
Metrics from other industries show mixed signals compared to September:
- Construction added 84,000 jobs.
- Health care and social assistance added 79,000 jobs, about 33% fewer than the 118,000 positions the industry added in September.
- Manufacturing added 38,000 positions after adding 60,000 jobs in September.
- Durable goods added 21,000 jobs after gaining 44,000 in September.
Financial activities added 31,000 jobs. Banks continued to function during the pandemic but limited the number of people in branch offices. Even before the pandemic, banks had been adding fewer positions as the Fed lowered interest rates. Lower rates reduce profitability to lenders because they must charge less for loans.
The mining industry, which includes the oil industry, added 1,000 jobs. Future oil prices are expected to remain subdued due to reduced demand.
Where Jobs Were Lost
The government lost 268,000 jobs after losing 220,000 positions in September.
The information sector lost 3,000 jobs. This sector, especially Silicon Valley, is critical to American global competitiveness.
The U.S. Jobs Report Explained
The monthly jobs report is also called the "Employment Situation Summary" and the "Non-Farm Payroll Report." It's a critical economic indicator because it's the first report of the month. It's also the most comprehensive and credible.
The Bureau of Labor Statistics surveys 160,000 non-farm businesses and agencies on the number of jobs, the wages paid, and the hours worked. The jobs report will tell you which industries are adding jobs, whether American workers are working longer hours, and how fast salaries are increasing.
The jobs report also provides the unemployment rate. To get the number of unemployed individuals, the BLS must undertake a separate survey of households instead of businesses. This household report also includes workers' age, sex, and race/ethnicity. The household survey has a more expansive scope than the establishment survey. It includes the self-employed, unpaid family workers, agricultural workers, and private household workers. They are excluded by the establishment survey.
The household survey is not as accurate as the business establishment report, though. It has a smaller sample size. That's why employment numbers are taken from the establishment survey. So the current unemployment statistics often show a different trend than the jobs report.
Other Jobs Reports
There are two other jobs reports. The monthly ADP National Employment Report is released on the first Wednesday of each month. It's produced by the ADP Research Institute, SM, and Moody’s Analytics. It uses business payroll data to report on the number of jobs added in the private sector. It excludes farming, as does the BLS report. But more importantly, it also excludes government jobs, which are included in the BLS report. For that reason, it's considered incomplete.
The ADP Report is useful because it's released the Wednesday before the BLS report.
The ADP report gives some analysts an earlier view of what might happen in the Friday report. ADP is quick to say it's not intended to be predictive. Like the BLS report, it's revised as more data comes in later in the month. These revised numbers are 96% correlated with the revised BLS jobs report.
The Department of Labor also releases a weekly jobless claims report. This measures the claims for initial unemployment benefits reported by each state every week. It also says how many of the unemployed are still receiving benefits. This report gives an indication of trends, whether there are more or less of the unemployed than the week before.
The main value of this report is that it is weekly and so it gives some idea of trends between the monthly jobs reports. It isn’t accurate when predicting the monthly report because it is volatile.
Bureau of Labor Statistics. "Employment Situation Summary." Table B. Accessed Nov. 6, 2020.
U.S. Bureau of Labor Statistics. "Employment, Hours, and Earnings from the Current Employment Statistics survey (National)." Accessed Nov. 6, 2020.
WhiteHouse.gov. "April Jobs Report Will Show the High Cost of States Shutting Down their Economies." Nov. 6, 2020.
Bureau of Labor Statistics. "Employment Situation Summary." Table A. Accessed Nov. 6, 2020.
ADP Research Institute. "National Employment Report." Accessed Nov. 6, 2020.
U.S. Department of Labor. "News Release." Accessed Nov. 6, 2020.