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Employment Surge in October

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Payroll employment is expected to beat the odds on seasonal adjustment in October and increase by 650,000 jobs following a net gain of less than 200,000 in September. Private sector payrolls are expected to account for 500,000 of the October gains, while we see some catch-up on hiring in education at the state and local levels.

School districts are struggling to bring back teachers and support staff who are retired, are afraid of contagion or found higher pay elsewhere. Retirees who typically worked part-time need to feel safer before returning; boosters and widespread vaccinations for 5-11 year olds could go a long way toward allaying those concerns.

Job openings surged 48% above February 2020 levels as of the third week in October, according to the hiring lab at the job listing site, Indeed. Postings for fully remote and high-wage jobs now equal those for low-wage, high-contact jobs. Looks for strong gains in everything from leisure and hospitality, retail and transportation. United Airlines was swamped with applications for 2,000 flight attendant positions after it put a vaccine mandate in place.

We should see the ranks of those who were ill due to COVID fall with the drop in cases and hospitalizations. Those workers reached 1.5 million in September; if the case counts are any indication, at least 250,000 more workers could return to work in October.

Manufacturing and construction hires are expected to remain constrained due to supply chain problems. We will be watching mining closely as shale production ramps up in response to higher prices.

Average hourly earnings are expected to rise by 0.4% monthly and 5% on a year-over-year basis. That would mark a sharp acceleration from the 4.6% gain in September. The average workweek is expected to hold at 37.8 hours.

Separately, the unemployment rate should hold at 4.8%, but for the right reasons. Participation in the labor force is expected to tick up a bit. The household survey showed a sharp drop in the number of people who were unable to look for work because they were caring for someone ill. The number of people caring for school-age children also plummeted with schools reopening. More of those parents will be able to look for work as long as quarantines continue to abate.

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