October 2001 Employment Situation

Historical release narrative reproduced from the official public-domain source. Statistical tables, standard technical appendices, administrative material and attendance rosters are omitted; formatting is adapted for reading. Figures retain the release's historical context and may have been revised. Consult the linked source for the complete document.

Employment fell sharply in October, and the unemployment rate jumped to 5.4 percent, the Bureau of Labor Statistics of the U.S. Department of Labor reported today. Nonfarm payroll employment dropped by 415,000 over the month, by far the largest of three consecutive monthly declines. The job losses in October were spread across most industry groups, with especially large declines in manufacturing and services.

The labor market data from the household and payroll surveys for the month of October are the first data from these surveys to reflect broadly the impact of the terrorist attacks of September 11. The labor market had been weakening before the attacks, and those events clearly exacerbated this weakness. It is not possible, however, to quantify the job-market effects of the terrorist attacks.

Unemployment (Household Survey Data)

The number of unemployed persons increased by 732,000 to 7.7 million in October. The unemployment rate rose by 0.5 percentage point to 5.4 percent, seasonally adjusted, the highest level since December 1996. Since October 2000, when both measures had reached their most recent lows, the unemployment level has risen by 2.2 million and the rate by 1.5 percentage points. (See table A-1.)

The unemployment rates for most of the major worker groups--adult men (4.8 percent), adult women (4.8 percent), whites (4.8 percent), blacks (9.7 percent), and Hispanics (7.2 percent)--rose in October. (See tables A-1 and A-2.)

The number of newly unemployed persons, those unemployed for less than 5 weeks, rose by 401,000 to 3.2 million in October. (See table A-6.) The number of unemployed job losers not on temporary layoff grew by 518,000 over the month and has increased by 1.4 million since last December. (See table A-7.)

Total Employment and the Labor Force (Household Survey Data)

Total employment dropped by 619,000 in October to 134.6 million, seasonally adjusted, and the employment-population ratio fell by 0.4 percentage point to 63.3 percent. Since January, employment has fallen by about 1.4 million, and the employment ratio has declined by 1.2 percentage points. (See table A-1.)

The number of persons who worked part time for economic reasons rose by 274,000 in October to 4.5 million, seasonally adjusted. These are persons who would have preferred to work full time but worked part time because their hours had been cut back or because they were unable to find a full- time job. Since August, the number of persons who worked part time for economic reasons has increased by about 1.1 million. Most of this rise has been among persons whose hours were cut due to slack work or business conditions. (See table A-4.)

Both the total number of persons in the civilian labor force (142.3 million) and the labor force participation rate (66.9 percent) were little changed in October. (See table A-1.)

Persons Not in the Labor Force (Household Survey Data)

About 1.4 million persons (not seasonally adjusted) were marginally attached to the labor force in October, up from 1.0 million a year earlier. These persons wanted and were available for work and had looked for a job sometime in the prior 12 months but were not counted as unemployed because they had not actively searched for work in the 4 weeks preceding the survey. The number of discouraged workers was 330,000 in October, up from 230,000 a year earlier. Discouraged workers, a subset of the marginally attached, were not currently looking for work specifically because they believed no jobs were available for them. (See table A-10.)

Industry Payroll Employment (Establishment Survey Data)

Nonfarm payroll employment fell by 415,000 in October to 131.8 million, seasonally adjusted. This was the largest employment decrease since May 1980 and followed a decline of 213,000 in September. Since the recent employment peak in March, overall job losses have totaled 887,000; losses in the private sector have totaled 1.2 million. In October, employment was down in nearly every major industry. (See table B-1.)

Widespread job losses continued in manufacturing, as factory employment fell by 142,000. October was the 15th consecutive month of factory job losses, bringing the decline in employment since July 2000 to 1.3 million. In October, large employment cutbacks continued in both electrical equip- ment (22,000) and industrial machinery (21,000). These two industries have accounted for a third of the factory jobs lost since July 2000. Auto manufacturing declined by 21,000 over the month.

Elsewhere in the goods-producing sector, employment in construction fell by 30,000, following 3 months of little change. In October, declines in general building contracting and heavy construction were coupled with continued decreases in special trades. Since May, employment in special trades has fallen by 56,000. In mining, oil and gas extraction lost 4,000 jobs in October. Employment in the industry had grown during the first half of this year but has weakened in recent months due to sharp declines in the price of oil.

The services industry lost 111,000 jobs in October, the largest decline in the history of this series. A sizable decrease in help supply employ- ment (107,000), which provides workers to other businesses, reflected economic uncertainty in other industries. Subsequent to the September 11 terrorist attacks, employment declines accelerated markedly in travel- related industries, including hotels (46,000) and auto services (13,000), notably in auto rental agencies and in parking services. In October, job growth slowed in health services, but the industry has added nearly a quarter of a million jobs thus far this year. Educational and social services both added jobs over the month.

Retail trade employment declined for the third straight month in Octo- ber, with an over-the-month decrease of 81,000. About half the October losses were in eating and drinking places, where employment was down by 115,000 since July. Over the month, employment decreased in apparel stores and miscellaneous retail establishments, after seasonal adjustment; these industries added fewer workers than usual at the beginning of the holiday employment buildup.

Employment declines continued in transportation and public utilities with a loss of 55,000 jobs in October. Over-the-month job losses occurred in air transportation (42,000) and transportation services (11,000), which includes travel agencies. Declines in these industries accelerated sharply following the September 11 attacks.

Wholesale trade employment fell by 23,000 jobs in October, following a similar loss in September. Since its last peak in November 2000, the industry has lost 105,000 jobs. Over-the-month declines were concentrated in durable goods distribution.

Slow growth continued for the third consecutive month in finance, insurance, and real estate, following losses in June and July. Over the month, employment in mortgage banking remained on an upward trend, as that industry continued to benefit from low interest rates. In contrast, security brokerages lost jobs again in October; since March, employment in the industry has fallen by 31,000.

Employment in local government, excluding education, increased by 26,000 in October, after seasonal adjustment. The industry had shown no growth in the prior 2 months. Other parts of government were little changed in October.

Weekly Hours (Establishment Survey Data)

The average workweek for production or nonsupervisory workers on private nonfarm payrolls edged down by 0.1 hour in October to 34.0 hours, seasonally adjusted. The manufacturing workweek decreased by 0.2 hour to 40.4 hours. Manufacturing overtime was down by 0.1 hour to 3.8 hours. Since July 2000, the factory workweek has fallen by 1.4 hours and factory overtime by 0.9 hour. (See table B-2.)

The index of aggregate weekly hours of production or nonsupervisory workers on private nonfarm payrolls fell by 0.7 percent in October to 148.8 (1982=100), seasonally adjusted. The index is down by 2.2 percent from its recent peak in January. The manufacturing index fell by 1.3 percent to 94.7 in October and has fallen by 11.5 percent since July 2000. (See table B-5.)

Hourly and Weekly Earnings (Establishment Survey Data)

Average hourly earnings of production or nonsupervisory workers on private nonfarm payrolls increased by 2 cents in October to $14.47, seasonally adjusted. This followed a gain of 5 cents (as revised) in September. Average weekly earnings fell by 0.2 percent in October to $491.98. Over the year, average hourly earnings increased by 4.1 percent and average weekly earnings grew by 2.9 percent. (See table B-3.)