US labor sector growth regained momentum in October as impact from summer Covid wave subsides

US non-farm payrolls rose by 531,000 in October, from upwardly revised September’s figure from 194,000 to 312,000 and strongly beating expectations for 450,000 increase, signaling that US job growth is picking up as summer wave of coronavirus infections subsides.

Strong figures from the labor sector also suggest that economic activity was regaining momentum at the beginning of the fourth quarter after the US economy slowed in the third quarter on the latest wave of Covid-19 infections.

Upbeat report from the labor sector adds to positive signals from increased activity in services sector and rising consumer confidence that further brightens the outlook after the summer wave of Delta variant, supply disruptions and shortages of goods, restrained Q3 economic growth to its slowest pace in over one year.

The separate report showed that unemployment rate in the United States fell to 4.6% in October from 4.8% in September, showing that situation improves, although many remain unemployed and outside the labor force, despite huge demand from the US companies for workers.

The US Federal Reserve expect the outlook for the labor sector to improve further on progress in containing the virus that would boost the economic activity and gains in employment, as the central bank connects their decision to start tightening monetary policy with full recovery of the labor market from the pandemic.

On the other side, rising concerns over the White House vaccine mandate which comes into effect on Jan 4 and applies to federal government contractors and businesses with 100 or more employees compound, would impact the growth in the labor sector, along with rise in strikes as workers take advantage of tight labor market to demand more pay and better conditions.

However, strong demand for workers is expected to continue to boost wage growth, which should underpin consumer spending, especially during the coming holidays.