Job growth rebounds in October: These industries hired the most, fewest workers last month

Job creation roared back in October, driven by strong hiring across nearly every industry ranging from restaurants to retailers to hospitals – a sign that employers were more optimistic about the U.S. economic outlook as coronavirus cases receded.

The Labor Department said in its Friday report that employers added 531,000 jobs last month, well above Wall Street's expectations for a gain of 450,000. The unemployment rate fell to 4.6% last month, from 4.8% in September. While a relatively low level, it's still well above the pre-pandemic jobless rate of 3.5%.

"Hiring picked up in October as the delta surge waned, with the vast majority of industries contributing job gains, particularly leisure and hospitality," said Julia Pollack, a chief economist at ZipRecruiter. "The report clearly points to a demand-driven recovery where rapid hiring is shrinking the ranks of unemployed workers."

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Leisure and hospitality, one of the industries hit hardest by the coronavirus pandemic, accounted for the biggest payroll gain last month, with an increase of 164,000 new workers. Restaurants and bars alone added 119,400 jobs last month, while hotels and other accommodation services saw an increase of 23,200 as Americans once again ventured out to eat, travel and shop.

Employment in the sector has risen by 2.4 million in 2021, although there are still about 1.4 million fewer jobs in leisure and hospitality than there were in February 2020, before the pandemic began.

There were also notable job increases in the professional and business services sector, which saw payroll jump by 100,000 last month. Management and technical consulting firms added 13,600 jobs, scientific research and development increased by 5,700 and computer systems design and related services rosed by 7,000.

"This is the strong progress from the job market that we wanted to see," Jeffrey Buchbinder, LPL financial equity strategist, said. "Some of the pandemic-driven headwinds preventing people from taking open jobs have started to abate, and given strong demand, we expect to see even better numbers in the months ahead." 

Education and health services, another major source of job creation, surged by 64,000 with gains across the board. About a half of those – 37,200 – stemmed from health care, while 17,00 came from educational services, reflecting the continued resumption of in-person learning and other school activities across the country. 

Goods-producing sectors also drove job growth last month as industries sought – an employment picture that comes as supply chain disruptions bog down the global production of goods. Manufacturers saw payroll jump by 60,000 in October, largely stemming from transportation equipment makers (23,700). Construction, meanwhile, added 44,000 workers in October, largely due to the 28,400 specialty trade contractors who were hired. Heavy and civil engineering construction increased by 12,100.

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Transportation, trade and warehousing, meanwhile, added 54,400 workers. 

Still, there were some drags on growth last month; the government shed 74,000 jobs – losses that mostly took place in state (21,500) and local (43,400) government education systems.

"This is due to smaller-than-expected hiring at the start of the school year, but that expectation is based in part on seasonal patterns from before COVID-19," said Daniel Zhao, senior Glassdoor economist. "Due to leaner school workforces, these seasonally adjusted losses are likely overstated."