For the sixth consecutive month, US job recovery continued, adding more jobs in October, pushing the unemployment rate further lower.
The Bureau of Labor Statistics’ monthly jobs report indicated that 638,000 jobs were added in October but the US is still down approximately 10 million jobs since the onset of the coronavirus pandemic in February.
Falling unemployment rate
Aside from the additional jobs last month, the labor statistics bureau’s report also indicated that the unemployment rate went down from 7.9% in September to 6.9% in October. The rate drop beat economists’ consensus estimate of 7.7% for the month.
The decline was a result of numerous workers returning to their jobs, as demonstrated by a decrease in the number of people on temporary layoff, and slight change in the number of permanently unemployed workers.
Andrew Hunter, senior US economist at Capital Economics, argued that this was a sign that the longer-term impact of the pandemic may not be as severe as expected.
Meanwhile, Daniel Zhao, senior economist at Glassdoor, said: “We saw unemployment drop more than expected on the back of an increase in the labor force and basically unchanged permanent layoffs. You can’t really complain about this report, aside from the fact there is still a long way to go.”
Labor economist Betsey Stevenson pointed out that there’s a long way before full recovery is achieved and that at the current rate of improvements, the job market could return to its pre-pandemic state by February 2022.
Permanent job losses and recent layoffs
In October, the Bureau of Labor Statistics released seasonally adjusted data, which revealed that the number of unemployed people classified as permanently losing their old jobs amidst the coronavirus pandemic increased by 345,000 in September to a seven-year high of 3.8 million.
The numbers demonstrate that many of what were initially hoped as furloughs or temporary job losses have become permanent as businesses closed down and take cost cutting measures.
Prior to the onset of the pandemic, this number was at a 19-year low in February. The closely monitored labor market measure has almost tripled since then.
Austan Goolsbee, former economic adviser to President Obama, commented: “It’s an ominous sign.”
Gus Faucher, chief economist at PNC, said: “It’s very worrisome — not only for these individuals, but for what it says about the recovery.”
In recent weeks, several US companies have announced mass layoffs due to losses from the impact of the pandemic.
Disney announced that it will lay off 28,000 employees in the US due to the impact of the coronavirus pandemic on its parks and resorts business. Disney said the affected jobs will be those from its Parks, Experiences and Products unit and that 67% of the employees to be laid off will be part-time workers.
There are over 100,000 US employees in the company’s parks and resorts division.
American Airlines and United Airlines said they will be cutting 32,000 jobs combined after they failed to secure additional federal aid.
After failed attempts to get additional federal aid, American Airlines announced that it will cut 19,000 jobs while United Airlines will reduce its work force by 13,000 employees.
United Airlines chief executive officer (CEO) Scott Kirby said that the decision on the layoffs represented “a very sad day for all of us here at United.”