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Consumer sector leads October payroll gains despite spike in COVID-19 cases

Consumer-focused industries accounted for nearly 60% of the U.S. job gains in October despite new spikes in coronavirus cases across the country.

The U.S. economy added 638,000 jobs in October, beating a forecast by economists polled by Econoday that estimated the creation of 575,000 jobs.

"While the results may go relatively unnoticed due to the focus on the as yet-unresolved US presidential election, they suggest the labor market remained surprisingly robust last month despite the relentless climb higher in coronavirus cases," Don Curren, market strategist at Cambridge Global Payments, said in a note.

Retail trade, leisure and hospitality industries contributed to 58.8% of the total gains with 375,000 jobs, data from the Bureau of Labor Statistics shows.

"The payroll report confirmed that the U.S. economy continues to heal and is on solid footing," Quincy Krosby, chief market strategist at Prudential Financial, told Market Intelligence, adding that the contribution from consumer-focused industries was strong as the overall economy reopened.

In the consumer industry, the leisure and hospitality sector added 271,000 jobs in October, up 2.5% from September. But employment in the sector is still 3.5 million jobs below the February level.

Food services and drinking places, a sector within leisure and hospitality, added 192,000 jobs during the month. Retail posted a month-on-month gain of 0.69% in jobs at 104,000, but employment in the industry is down by 499,000 jobs since February.

Krosby voiced concerns about the potential impact of increases in COVID-19 cases on some consumer industries. "Should the expected surge in COVID-19 lead to restrictions, or even self-imposed restrictions where economic activity slows, the expectations are that — even at the margin — job growth could be slowed in the leisure and hospitality industries," she said via email.

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The number of unemployed people who were on temporary layoffs fell by 1.4 million in October to 3.2 million, while the number of permanent job losses was little changed in October and stood at 3.7 million.

"While the rehiring of furloughed workers is pulling unemployment down rapidly, it is the low-hanging economic fruit of the recovery. Permanent layoffs were essentially unchanged at 3.7 million, a positive sign that permanent economic damage is not accumulating as quickly as feared," Glassdoor Senior Economist Daniel Zhao said in a statement.

The number of Americans filing for unemployment benefits fell to 751,000 in the week ended Oct. 31 from a revised reading of 758,000 in the week prior, the Labor Department said in a separate report Nov. 5.

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