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U.S. private-sector employment added 161,000 jobs in October, and the unemployment rate fell to 4.9 percent, according to the U.S. Bureau of Labor Statistics (BLS), the last employment report before national elections Nov. 8.
In the presidential race, both candidates can find evidence in the report that backs their agenda. Republican candidate Donald Trump can point to the so-so numbers and the 5.9 million people identified as involuntary part-time workers as a reason to make a change.
Hillary Clinton, the Democrat candidate, can tout the continuing long-term trend of 73 straight months of gains, and the drop in the unemployment rate to a post-recession low.
"The October jobs report was as good as an optimist dared hoped for," said Jed Kolko, chief economist with job site Indeed. "While job growth was slightly below consensus and the prior-year average, it was more than strong enough to keep the labor market improving, and revisions to previous months were solidly up."
Payroll employment was revised up for August (from +167,000 to +176,000) and September (+156,000 to +191,000).
"The breadth of gains across industries was healthy, with a surprisingly large increase in government payrolls, possibly related to the election," said Josh Wright, chief economist for applicant tracking system and recruitment software firm iCIMS, based in Matawan, N.J. "There was a surprising, if small, outright decline in retail jobs. The BLS seasonal adjustments may have overcorrected for holiday hiring, since e-commerce is a relatively recent phenomenon and it takes time for the BLS to incorporate shifts in the economy into its seasonal adjustments."
Employment growth averaged 181,000 new jobs per month in 2016, compared with an average monthly increase of 229,000 in 2015. "Job growth remains strong although the pace of growth appears to be slowing," said Mark Zandi, chief economist of Moody's Analytics. "Behind the slowdown is businesses' difficulty filling open positions."
Employment in professional and business services (+43,000), health care (+31,000) and financial activities (+14,000) rose.
Construction employment increased in 21 states and the District of Columbia between August and September, according to the Associated General Contractors of America. "The list of states that are adding construction jobs has been shrinking, yet contractors generally report they are busy now and optimistic about the workload ahead," said Ken Simonson, chief economist for the association. "The lack of employment increases in many states may reflect the difficulty contractors say they are having in finding qualified workers."
In October, average hourly earnings for all private-sector employees rose by 10 cents to $25.92, following an 8-cent increase in September. Over the year, average hourly earnings have risen by 2.8 percent.
That's the fastest rise since the Great Recession, Kolko said. "If you wanted to show that the economy is still getting better for the typical voter, this report gives you what you needed."
Unemployment Ticks Down
The BLS counted 7.8 million people (or 4.9 percent of the labor force) as unemployed—defined as being jobless, having actively looked for work in the prior four weeks, and being currently available for work.
The unemployment rate for Hispanics declined from 6.4 percent in September to 5.7 percent in October, while the rates for adult men (4.6 percent), adult women (4.3 percent), teenagers (15.6 percent), Asians (3.4 percent), blacks (8.6 percent) and whites (4.3 percent), showed little change.
The number of long-term unemployed (those jobless for 27 weeks or more) sits at 2.0 million and accounts for 25.2 percent of the unemployed.
The number of individuals categorized as involuntary part-time workers—those seeking full-time employment but working part time—was unchanged at 5.9 million in October. The number of part-time workers "underlines concerns about underemployment and the quality of jobs that are being created," Wright said.
Additionally, 1.7 million people were considered marginally attached to the labor force—that is, they are unemployed but want and are available to work, and had looked for a job sometime in the previous 12 months. Among this group, 487,000 individuals were considered discouraged—not currently looking for work because they believe no jobs are available for them.
"The marginally attached numbers are still not at prerecession levels but they are an improvement over last year," said Jennifer Schramm, SHRM-SCP, manager of workforce trends at the Society for Human Resource Management. "In October, there were 1.7 million marginally attached to the labor force, but this was down by 216,000 from a year earlier. Likewise, the 487,000 discouraged workers in October were fewer by 178,000 from the same time last year."
The remaining 1.2 million people marginally attached to the labor force in October had not searched for work in the past month for reasons such as school attendance or family responsibilities, according to the BLS.
The labor force participation rate—at 62.8 percent—changed little. "Labor force participation reversed the prior month’s uptick and involuntary part-time work was virtually unchanged at an elevated level," Wright said. "Also, all the decline in unemployment was concentrated in short-term unemployment, not long-term."
Jobs Report Doesn't Tell All
Pete Lamson, CEO of JazzHR, a hiring technology company based in Pittsburgh, reported that his company's data showed a 38 percent decrease in net new jobs posted October from September. "Interestingly, while fewer jobs were posted in October, our data showed that [small business] hiring remained steady month over month, indicating that companies are filling a backlog of openings," he said. "This speaks to the challenge employers are having in finding candidates whose experience and skills match their open positions, which is compounded as unemployment rates remain low and competition for talent remains high. With openings going unfilled for longer periods of time, there's less urgency to create new ones."
Ken Esch, a Chicago-based partner at PricewaterhouseCoopers sees the increase in job figures as evidence that U.S. companies "continue to make it their mission to attract and retain talent. The uptick in hiring may also reflect lower wage pressure—just 16 percent of private companies feel pressure to increase wages, down from the 33 percent that felt this in late 2015."
Lamson said that the approaching election may have played a larger role in the number of new job openings in the small business (SMB) sector. "The results would indicate that SMBs are tentative to add new positions, waiting it out to see how the election outcome will impact their respective sectors and overall economic growth," he said. "There are a number of items at play in this election like taxes, minimum wage and health care costs that could potentially reshape SMB growth strategies—most notably, workforce expansion."
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