US adds another 638,000 jobs but still leaves mountain to climb

Jobless rate falls to 6.9pc but employment is still down by 10m people compared with the pre-Covid era

The US jobs market continued its remarkable recovery from the depths of the coronavirus pandemic, adding another 638,000 jobs through October.

It takes the unemployment rate down to 6.9pc, the Bureau of Labor Statistics said in its non-farm payrolls report, reversing most of the spike that took joblessness up to almost 15pc in April.

Private employment rose by more than 900,000, but the public sector lost 268,000 jobs as workers had been taken on temporarily for the census earlier in the year.

However there are still more than 11m people unemployed, close to double the 5.8m before the pandemic struck.

Another 2m want a job but have not looked in recent weeks and so do not meet the definition of unemployment.

Long-term unemployment is also increasing, with the number out of work for more than 27 weeks rising by 50pc on the month, from 1.2m to 3.6m.

In terms of employment, 149.8m people are in work in the US, which is still down by more than 10m from before Covid swept the world, underlining the challenge facing the winner of the Presidential election.

“While the economy has reclaimed 12m jobs from the trough of the crisis in April, it has barely passed the halfway mark in what will be a grueling marathon. With employment still 10m lower than pre-Covid levels, the worsening health situation and lapsing fiscal aid represent concerning obstacles,” said Gregory Daco at Oxford Economics.

Accounting for people who have dropped out of the labour force he estimates the unemployment rate should really be closer to 9pc.

There are key risks to the economy in the coming months that could slow progress in the jobs market, said Richard Flynn at Charles Schwab.

“The road ahead to an economic recovery remains subject to a number of headwinds – namely post-election volatility, the lack of an agreed fiscal relief package and resurgent Covid-19 virus cases,” he said.

“With another wave of infection, consumers may grow cautious about congregating and curtail spending on services like travel and restaurants until there is a vaccine available.”

This is particularly important as the leisure and hospitality industries were the biggest drivers of jobs in the month, adding 271,000 positions in October.

Professional and business services were nextwith 208,000 jobs, followed by the retail trade’s 104,000.