The US in October added 638K non-farm payrolls jobs despite the resurgance of Covid-19 leading to the weakest ADP report since July. Unemployment is recovering after the Coronavirus hit the economy as people return to work. The unemployment rate fell to 6.9% from 7.9% in September.
The US in October added 638K non-farm payrolls jobs despite the resurgance of Covid-19 leading to the weakest ADP report since July. Unemployment is recovering after the Coronavirus hit the economy as people return to work. The unemployment rate fell to 6.9% from 7.9% in September.
October 2020 U.S. Employment Report
The Covid-19 virus has wreaked havoc on the global economy. The world’s economy was shut down and much of America has stay at home orders. Jobless claims numbers have been records and unfortunately the story is much worse as people have not all been able to return to work. The May through September reports however were a surprise gain in jobs. The expectation was for more recovery in job losses for September.
The market expected the October report released Friday to show nonfarm payrolls rise 638,000 with the recovering economy. The ADP report this week showed 330,000 private hirings for the month, well below the expected 600,000. The volatile numbers point up how difficult estimating the jobs situation is amid an economy struggling to get back to normal following the coronavirus-inducted shutdown. The national unemployment rate had come off a 50 year low 3.5% with higher participation before the Covid-19 lockdown now to 7.9%.
The amount of jobs brought back since May is nearly 12 million. The unemployment rate is expected to fall two-tenths of a percentage point to 7.7%. However, the gains only make up for a little more than half the 22 million positions lost in the first two months of the pandemic. Initial jobless claims continue to run at very high levels with the difficult challenges for the labor market’s recovery path.
The concern is that job creation could slow again amid uncertainty with a Biden election and a rise in Covid-19 cases, which increased by 102,831 on Thursday to bring the pandemic total to over 9.4 million, according to the Covid Tracking Project. More than 224,000 Americans have died from the virus and its complications.
October 2020 US Employment Report Expectations
Employment:
- Non-farm payrolls 638,000 vs 530,000 expected, Prior 661,000 (revised to )
- Unemployment rate 6.9% v 7.7% expected/prior 7.9%
- Participation rate 61.7% vs 61.3% exp 61.4% prior (63.3% highest since 2014)
- Underemployment rate 12.1% vs 12.9% Exp 12.8% prior
- Two month net revision +15k Prior +145k
- Manufacturing payrolls +38k vs +26k exp +66k prior
- Private payrolls +906k vs +855k exp +877k prior
Wages:
- Average hourly earnings +0.2% m/m v 0.2% Expected +0.1% m/m Prior
- Average hourly earnings +4.5% y/y v 4.7% Prior Expected
- Average weekly hours 34.8 v prev 34.7 Expected/Prior
Household Survey Data
In October, the unemployment rate declined by 1.0 percentage point to 6.9 percent, and the number of unemployed persons fell by 1.5 million to 11.1 million. Both measures have declined for 6 consecutive months but are nearly twice their February levels (3.5 percent and 5.8 million, respectively).
Unemployment rates declined among all major worker groups in October. The rate was 6.7 percent for adult men, 6.5 percent for adult women, 13.9 percent for teenagers, 6.0 percent for Whites, 10.8 percent for Blacks, 7.6 percent for Asians, and 8.8 percent for Hispanics. (See tables A-1, A-2, and A-3.) Among the unemployed, the number of persons on temporary layoff fell by 1.4 million to 3.2 million. This measure is down considerably from the high of 18.1 million in April but is 2.4 million higher than in February. The number of permanent job losers, at 3.7 million in October, changed little over the month but is 2.4 million higher than in February. (See table A-11.)
In October, the number of long-term unemployed (those jobless for 27 weeks or more) increased by 1.2 million to 3.6 million, accounting for 32.5 percent of the total unemployed. By contrast, the number of unemployed persons jobless 15 to 26 weeks decreased by 2.3 million to 2.6 million, and the number of persons jobless 5 to 14 weeks decreased by 457,000 to 2.3 million. The number of persons who were jobless less than 5 weeks was about unchanged at 2.5 million. (See table A-12.)
The labor force participation rate increased by 0.3 percentage point to 61.7 percent in October; this is 1.7 percentage points below the February level. The employment-population ratio increased by 0.8 percentage point to 57.4 percent in October but is 3.7 percentage points lower than in February. (See table A-1.)
In October, the number of persons who usually work full time rose by 1.2 million to 123.6 million, and the number who usually work part time increased by 1.0 million to 26.2 million. (See table A-9.) The number of persons employed part time for economic reasons increased by 383,000 to 6.7 million in October, after declines totaling 4.6 million over the prior 5 months. These individuals, who would have preferred full-time employment, were working part time because their hours had been reduced or they were unable to find full-time jobs. This group includes persons who usually work full time and persons who usually work part time. (See table A-8.)
The number of persons not in the labor force who currently want a job decreased by 539,000 to 6.7 million in October; this measure is 1.7 million higher than in February. These individuals were not counted as unemployed because they were not actively looking for work during the last 4 weeks or were unavailable to take a job. (See table A-1.)
Among those not in the labor force who currently want a job, the number of persons marginally attached to the labor force, at 2.0 million, was about unchanged in October. These individuals were not in the labor force, wanted and were available for work, and had looked for a job sometime in the prior 12 months but had not looked for work in the 4 weeks preceding the survey. The number of discouraged workers, a subset of the marginally attached who believed that no jobs were available for them, was 588,000 in October, essentially unchanged from the previous month.
Household Survey Supplemental Data
In October, 21.2 percent of employed persons teleworked because of the coronavirus pandemic, down from 22.7 percent in September. These data refer to employed persons who teleworked or worked at home for pay at some point in the last 4 weeks specifically because of the pandemic. In October, 15.1 million persons reported that they had been unable to work because their employer closed or lost business due to the pandemic—that is, they did not work at all or worked fewer hours at some point in the last 4 weeks due to the pandemic. This measure is down from 19.4 million in September.
Among those who reported in October that they were unable to work because of pandemicrelated closures or lost business, 11.7 percent received at least some pay from their employer for the hours not worked, up from 10.3 percent in September. About 3.6 million persons not in the labor force in October were prevented from looking for work due to the pandemic. This is down from 4.5 million in September. (To be counted as unemployed, by definition, individuals must either be actively looking for work or on temporary layoff.) These supplemental data come from questions added to the household survey beginning in May to help gauge the effects of the pandemic on the labor market. The data are not seasonally adjusted. Tables with estimates from the supplemental questions for all months are available online at www.bls.gov/cps/effects-of-the-coronavirus-covid-19-pandemic.htm
Establishment Survey Data
Total nonfarm payroll employment rose by 638,000 in October and has increased for 6 consecutive months. In October, nonfarm employment was below its February level by 10.1 million, or 6.6 percent. Notable job gains occurred over the month in leisure and hospitality, professional and business services, retail trade, and construction. Employment in government declined.
Employment in leisure and hospitality increased by 271,000 in October, with gains in food services and drinking places (+192,000); arts, entertainment, and recreation (+44,000); and accommodation (+34,000).
Leisure and hospitality has added 4.8 million jobs since April, but employment in the industry is down by 3.5 million since February. Professional and business services added 208,000 jobs in October, with temporary help services (+109,000) accounting for about half of the gain.
Employment also increased in services to buildings and dwellings (+19,000), computer systems design and related services (+16,000), and management and technical consulting services (+15,000). Employment in professional and business services is 1.1 million below its February level. In October, retail trade added 104,000 jobs, with almost one-third of the gain in electronics and appliance stores (+31,000).
Employment also rose in motor vehicle and parts dealers (+23,000), furniture and home furnishings stores (+14,000), clothing and clothing accessories stores (+13,000), general merchandise stores (+10,000), and nonstore retailers (+9,000). Employment in retail trade has risen by 1.9 million since April but is 499,000 below its February level.
Construction added 84,000 jobs in October. Specialty trade contractors added jobs, both in the nonresidential (+28,000) and residential (+18,000) components. Employment also rose in heavy and civil engineering construction and in construction of buildings (+19,000 each). Construction has added 789,000 jobs in the last 6 months, but employment is down by 294,000 since February.
Employment in health care and social assistance rose by 79,000 in October but is down by 950,000 since February. In October, health care employment increased by 58,000, with the largest gains occurring in hospitals (+16,000), offices of physicians (+14,000), offices of dentists (+11,000), and outpatient care centers (+10,000). These increases were partially offset by a decline of 9,000 in nursing and residential care facilities. Social assistance added 21,000 jobs over the month.
Employment in transportation and warehousing increased by 63,000 in October, with gains occurring in warehousing and storage (+28,000), transit and ground passenger transportation (+25,000), and truck transportation (+10,000). By contrast, air transportation shed 18,000 jobs. Employment in transportation and warehousing is 271,000 below its February level.
The other services industry added 47,000 jobs in October, with gains occurring in personal and laundry services (+27,000) and in repair and maintenance (+18,000). Employment in other services is 436,000 below its February level. Manufacturing employment rose by 38,000 in October but is 621,000 lower than in February. Gains occurred in fabricated metal products (+7,000), primary metals (+6,000), and wood products (+4,000). Employment continued to trend up in food manufacturing (+6,000) and in plastics and rubber products (+4,000). Employment in financial activities rose by 31,000 in October but is 129,000 lower than in February.
Over-the-month job gains occurred in finance and insurance (+17,000) and real estate (+10,000). In October, government employment fell by 268,000. A decrease of 138,000 in federal government was driven by a loss of 147,000 temporary 2020 Census workers. Job losses also occurred in local government education and state government education (-98,000 and -61,000, respectively). Employment in other major industries, including mining, wholesale trade, and information, changed little in October.
In October, average hourly earnings for all employees on private nonfarm payrolls increased by 4 cents to $29.50. Average hourly earnings of private-sector production and nonsupervisory employees rose by 5 cents to $24.82. The large employment fluctuations over the past several months—especially in industries with lower-paid workers—complicate the analysis of recent trends in average hourly earnings.
The average workweek for all employees on private nonfarm payrolls was unchanged at 34.8 hours in October. In manufacturing, the workweek increased by 0.3 hour to 40.5 hours, and overtime rose by 0.2 hour to 3.2 hours. The average workweek for production and nonsupervisory employees increased by 0.1 hour to 34.2 hours.
The change in total nonfarm payroll employment for August was revised up by 4,000 from +1,489,000 to +1,493,000, and the change for September was revised up by 11,000 from +661,000 to +672,000. With these revisions, employment in August and September combined was 15,000 higher than -5- previously reported. (Monthly revisions result from additional reports received from businesses and government agencies since the last published estimates and from the recalculation of seasonal factors.)
The Employment Situation for November is scheduled to be released on Friday, December 4, 2020, at 8:30 a.m. (ET). Coronavirus (COVID-19) Impact on October 2020 Establishment and Household
October 2020 ADP U.S. Employment Report
- ADP said private companies added 365,000 positions for October well below the 600,000 estimate from a Dow Jones economist survey.
- Much lower than the 753,000 from September and the lowest since July.
- Services-related businesses were responsible for almost all the gains, with hospitality leading.
The ADP estimate, done in conjunction with Moody’s Analytics, has varied widely from the government’s official nonfarm payrolls report, particularly during the pandemic. Note the upwardly revised 753,000 in September actually was higher than the Labor Department’s count of 661,000, whereas previous months’ reports were considerably lower than the government’s.
- Services accounted for almost all the job creation with 348,000.
- Hospitality added 125,000 jobs
- Education and health services added 79,000
- Professional and business services added 60,000.
- Goods producing added 17,000 jobs, construction and manufacturing each added 7,000, natural resources and mining rose 3,000.
- Medium size companies employing 50 to 499 employees added 135,000.
- Large businesses contributed 116,000
- Small firms picked up 114,000.
“The labor market continues to add jobs, yet at a slower pace,” Ahu Yildirmaz, vice president and co-head of the ADP Research Institute, said in a statement. “Although the pace is slower, we’ve seen employment gains across all industries and sizes.”
Jobless Claims for the week ending October 31
- Initial jobless claims decreased by 7,000 for the week ending October 31 to 751,000.
- Continuing claims for the week ending October 24 decreased by 538,000 to 7.285 million.
- The four-week moving average for initial claims decreased by 4,000 to 787,000. The average in the prior-year period as 215,000.
- The four-week moving average for continuing claims decreased by 827,250 to 8,244,500, the average in the prior-year period was 1,693,750.
- The total number of people claiming benefits in all programs for the week ending October 17 stood at 21,508,662 versus 1,444,923 in the same period a year ago.
Challenger, Gray & Christmas October Job Cuts Report
- US based employers October job cuts 80 666 vs 118,804 prior
- October marked the lowest number of layoffs in seven months, 32% lower than September. It is 60% higher than the 50,275 cuts in the same month last year.
- October’s total is the lowest since February, when 56,605 cuts were announced.
- So far this year, 2,162,928 job cuts have been announced, 320% higher than the 515,144 cuts announced through October last year. It is the highest annual total on record.
“The bulk of the announcements this year are indeed in industries directly impacted by shutdown orders and consumers’ wariness to spend money in such places, like restaurants, hotels, bars, and brick-and-mortar retail. We’ve now seen tens of thousands of cuts in industries outside Entertainment and Retail, indicating the impact is spreading,” said Andrew Challenger, Senior Vice President of Challenger, Gray & Christmas, Inc.
The majority of cuts continue to come from Entertainment/Leisure companies:
Entertainment/Leisure 14,876, but the lowest monthly total since 1,344 cuts were announced in the sector in February. Through October, Entertainment/Leisure companies have announced 845,954 cuts, up 6,773% from the 12,308 announced in the same period last year.
Energy companies followed in October with 11,787 cuts, bringing the year-to-date total to 47,736, more than double the 23,778 cuts announced in the sector last year. It is the highest year-to-date total for the industry since 2016, when 103,147 cuts were announced through October.
Transportation companies announced the third-highest total for the month with 11,475 cuts, as airlines grapple with reduced travel and lower revenue. This sector has announced 159,674 cuts in the first ten months of 2020, a 530% increase from the 25,341 announced in the same period last year.
Retailers have announced 179,520 cuts so far this year, up 151% from the 71,485 cuts announced through October 2019.
“The lower numbers certainly indicate some companies impacted by shutdown orders were able to reopen and stave off cutting jobs. However, as case counts rise and more jurisdictions impose stricter enforcement, and stimulus money dries up with no coming legislation, uncertainty is likely guiding many company decisions on retaining workers,” he added.
- Demand downturn was cited as the reason for 25,281 cuts in October, the highest number for any reason.
- Market conditions followed with 16,529.
- Cost-Cutting caused 8,483 cuts last month
- Restructuring was cited for 7,945.
- COVID impacted 7,803 jobs in October, but leads all reasons in 2020, with 1,099,726.
Hiring Plans
- Companies have announced 255,198 hiring plans in October, bringing the year-to-date total to 2,928,091.
- Of those, 699,900 are seasonal hiring plans for the holidays.
- Retailers are responsible for the bulk of these plans, with 1,096,678, as demand for grocery stores and online shopping skyrocketed during the pandemic
- Transportation companies like shipping and trucking announced another 737,500 hiring plans.
September 2020 U.S. Employment Report
The Covid-19 virus has wreaked havoc on the global economy. The world’s economy as shut down and much of America has stay at home orders. Jobless claims numbers have been records and unfortunately the story is much worse as people have not all been able to file. The May through August reports however were a surprise gain in jobs. The expectation was for more recovery in job losses for August.
The market expected the September report released Friday to see nonfarm payrolls rise 875,000 with the recovering economy. The ADP report this week showed private hiring at just 749,000 jobs. Last month NFP came in with gains of 1.489,000 Logic suggests more volatility in the hiring data. The volatile numbers point up how difficult estimating the jobs situation is amid an economy struggling to get back to normal following the coronavirus-inducted shutdown. The national unemployment rate had come off a 50 year low 3.5% with higher participation before the Covid-19 lockdown now to 7.9%.
September 2020 US Employment Report v Expectations
Employment:
- Non-farm payrolls 661.000 vs 875,000 expected, Prior 1.371,000 (revised to 1489,000 )
- Unemployment rate 7.9% v 8.2% expected/prior 8.4%
- Participation rate 61.4% vs 61.8% exp 61.7% prior (63.3% highest since 2014)
- Underemployment rate 12.8% vs 14.5% Exp 14.2% prior
- Two month net revision +145k Prior -39k
- Manufacturing payrolls +66k vs +65k exp +29k prior
- Private payrolls +877k vs +855k exp +1027k prior
Wages:
- Average hourly earnings +0.1% m/m v 0.2% Expected +0.0% m/m Prior
- Average hourly earnings +4.7% y/y v 4.7% Prior Expected
- Average weekly hours 34.7 v prev 34.6 Expected/Prior
Household Survey Data
Household Survey Supplemental Data
Establishment Survey Data
Source: AFP, Challenger, DOL, TradersCommunity Data, BLS
From The TraderCommunity Research Desk