After two disappointing months of hiring, a key question overhanging Friday’s U.S. jobs report for October will be whether companies found more success this time in filling millions of open positions.
Economists have forecast that employers added roughly 400,000 jobs last month, according to a survey by the data provider FactSet. That would be a stronger showing than the average monthly gain of 280,000 in August and September, though well below the vigorous increases of about 1 million jobs each in June and July. The unemployment rate is expected to fall from 4.8% to 4.7%.
There are signs that the economy is emerging from a delta-induced slowdown and that the job market may be doing so as well. Consumer confidence rose in October after three months of declines. Services companies in such areas as retail, banking and warehousing reported a sharp jump in sales. And more Americans bought new homes last month.
Yet some companies say they still can’t find enough workers to fill jobs. Many parents, particularly mothers, haven’t returned to the workforce after having left jobs during the pandemic to care for children or other relatives. Defying the predictions of some, the expiration of a $300-a-week federal unemployment supplement hasn’t caused more people to look for work.
Most economists, though, say they’re hopeful that with vaccinations helping to suppress the delta wave, more people will seek and find jobs because they’re no longer sick or caring for someone who is or because they no longer fear becoming infected. Those health issues had sidelined more people in September than in previous months.
America’s workers, who now enjoy greater leverage in the job market than they have in decades, are receiving solid pay increases. The draw of higher income could entice more people to come off the sidelines and look for work again. Wages and salaries in the July-September quarter, compared with a year earlier, jumped by the most in 20 years. Most of that gain, though, went to already employed people who left their jobs: The number of people who quit, mostly to take new positions, has reached a record high.
Rising inflation, though, has eroded much of the value of those pay increases and has become the most serious headwind for the U.S. economy. Higher costs for food, heating oil, rents and furniture have burdened millions of families. Prices rose 4.4% in September compared with 12 months earlier, the sharpest such increase in three decades.
That inflation surge was a key reason why the Federal Reserve announced this week that it would begin winding down the stimulus it has given the economy since the pandemic recession struck last year. The Fed will do so by reducing its monthly bond purchases, which have been intended to hold down long-term interest rates to spur borrowing and spending.
Chair Jerome Powell suggested that it won’t be possible to gain a clear picture of the job market’s health until the impact of COVID-19 declines further, which could take months.
Yet in the meantime, there are plenty of signs that the economy is healing: The number of people applying for first-time unemployment benefits fell for a fifth straight week, to a level nearly as low as the pace of jobless claims before the pandemic struck 20 months ago.
And while hiring has slowed for now, consumer demand remains healthy. After several rounds of stimulus checks and other government support payments, Americans as a whole have amassed about $2.5 trillion more in savings than they had before the pandemic. As that money is spent, it will likely fuel further economic activity.
The Conference Board, a business research group, said that in its October consumer confidence survey, the proportion of Americans who said they planned to buy cars, homes or major appliances all rose. And nearly half the survey respondents said they planned to vacation in the next six months—the highest proportion since February 2020, before COVID-19 ripped through the economy.
That suggests that Americans are increasingly willing to spend more on in-person services such as airline trips, movies and concerts—activity they had largely avoided during the height of COVID.