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October 2021 Jobs Report: Getting on a Solid Path

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Today’s report is a sign that recovery could be closer than many thought. The US added 531,000 jobs in October and the unemployment rate declined to 4.6% from 4.8%.

This is the kind of recovery we can get when we are not sidelined by a surge in COVID cases.  If this is the sort of job growth we will see in the next several months, we are on a solid path. The public health situation needs to be under control for the US labor market to have a sustained economic recovery.

The potential for a quick recovery can be seen in the current trend in the prime age employment-to-population ratio. If that metric were to grow at its recent pace, it would hit its pre-pandemic level by next fall. Similarly, if payrolls continue to grow at their recent pace, they would catch their pre-pandemic trend by the middle of 2023. 

The composition of job gains was also encouraging. The leisure and hospitality sector led the way, suggesting that improvements on the public health front reduced the burdens on this pandemic-sensitive sector. While there were stronger employment gains in those industries, total payrolls there are still down more than 8% from their pre-pandemic levels.

The labor market is not yet fully recovered from the coronavirus-induced recession. But today’s report is a sign that recovery could be closer than many thought. We just need to get the pandemic behind us. The speed of employment gains has faltered at times this year, but the underlying momentum of the US labor market is quite clear.