Employment Market Firms Amid Wane in Infections; Winter Headwinds Present
Job creation picks back up. After a slowdown in August and September, hiring improved in October as 531,000 personnel were added to staffs. A downshift in the number of coronavirus infections and the expiration of federal unemployment benefits likely contributed to the greater job creation. Employment growth was most prevalent in the leisure and hospitality sector, predominantly at bars and restaurants, as well as in professional and business services. Last month’s gains helped lower the unemployment rate 20 basis points to 4.6 percent, above the 3.5 percent pre-pandemic low but below the long-run average.
Industrial sector posts landmark performance. Amid an ongoing labor shortage, the transportation and warehousing sector added an above-average 54,000 positions last month, reflecting the cur-rent state of supply chains. Production delays and port congestion have prompted some retailers and online marketers to increase inventories, adding to warehouse space demand, while the up-coming holidays portend an uptick in distribution volume. Hiring by manufacturers also climbed to 60,000 personnel in October, suggesting these firms are now receiving or are about to collect the parts they need to resume production. Last month’s employment figures signal industrial space demand continues to increase after a record 157 million square feet was absorbed in the third quarter, lowering vacancy to an equally notable 4.4 percent.
Foot traffic at retailers and hotels improves. Bars, restaurants and other retailers expanded headcounts by 154,000 last month, a positive sign that fewer COVID-19 cases translated into greater visits to stores. Nationally, retail vacancy fell 20 basis points year over year in September to 5.3 percent, the first annual decline since 2018. Asking rents also modestly improved, up 2.5 percent on average. Lower health risk may have also prompted more people to travel last month, when 23,000 new positions at hotels were added. Hotel occupancy averaged close to 63 percent in October, up 30 percentage points from a year prior. While occupancy is set to decline through year-end, the driver is traditional seasonality.