Job losses continued at a moderated pace in October. The Bureau of Labor Statistics (BLS) reported that total nonfarm payrolls shrank by 190,000 in October. The job losses in October, which followed job losses of 219,000 and 154,000 in September and August respectively, brought the total number of jobs lost during the recession to 7.3 million.  The construction and manufacturing sectors continued shedding jobs, albeit at a much more moderate pace than in the first quarter of 2009.  The healthcare sector continues to be one of the bright spots in this labor market, adding 29,000 jobs in October and nearly 600,000 jobs since the start of the recession. Additionally, temporary help services added 34,000 jobs over the month.  Changes in employment in temporary help services are often a leading indicator of employers’ willingness to hire, and October’s increase may be a sign of improving health in the labor market.  However, since a movement from temporary to permanent employment is not reflected in the unemployment rate, traditional indicators may not exhibit progress in the labor market. (See Chart)

Labor market conditions remain weak. The BLS reported that the unemployment rate rose 0.4 percentage points to 10.2 percent in October and the number of unemployed Americans rose to 15.7 million. This month’s report also showed a decline in the fraction of the population working or looking for work.  While the 0.1 percentage point decline in the labor force participation rate might have tempered a rise in unemployment, the low labor force participation rate may foreshadow stickiness in the unemployment rate as the economy recovers. The median duration of unemployment rose nearly 1.4 weeks to 18.7 in October and more than one-third of the unemployed have been without a job for six months or longer.  On November 6, President Obama signed into law an extension of unemployment benefits for those who have either already exhausted their benefits or will exhaust their benefits by the end of the year.  This legislation extends unemployment benefits for 14 weeks to those who live in states with an unemployment rate below 8.5 percent and 20 weeks to those who live in states with unemployment rates above 8.5 percent.  As of September 2009, more than half of all states have unemployment rates above 8.5 percent. The BLS will update state unemployment rates for the month of October on November 20.

Economic activity continues to expand. The Institute for Supply Management (ISM) reported that its non-manufacturing index, NMI, was 50.6 in October (an index value at or exceeding 50 indicates expansion).  This is the second consecutive month that activity in the non-manufacturing sector has expanded, albeit at a slower pace than in September. Nine industries expanded while seven industries contracted.  ISM’s manufacturing index, PMI, rose to 55.7. This is the third consecutive month that PMI has exceeded 50, indicating expansion.; It is at its highest level since April 2006.  The BLS reported that the average weekly hours of production and nonsupervisory workers in the manufacturing sector rose by 0.1 to 40 hours per week in October, consistent with the ISM’s report that part-time workers in the manufacturing sector were receiving callbacks to full-time employment.