In his latest commentary, the National Restaurant Association's Chief Economist Bruce Grindy breaks down the key October economic indicators released this week. The private sector added jobs at its strongest rate in eight months, while consumer confidence hit its highest level in more than four years. Both are indications that the economy continues to improve, albeit slowly.
After limping through the last few months, the economy showed new signs of life in October. According to the Bureau of Labor Statistics’ establishment survey, the private sector added a net 184,000 jobs in October, its strongest gain in eight months. While it’s still not at the levels needed to significantly bring down unemployment, October’s job growth is certainly a step in the right direction.
Job growth was broad-based in October, with professional-and-business services (51,000), retail trade (36,000), health care and social assistance (33,000), restaurants and bars (23,000), construction (17,000) and manufacturing (13,000) all posting solid gains.
The household survey backed up the positive reporting by employers. The unemployment rate edged up to 7.9 percent in October, but that was due in part to an increase in the labor force participation rate, which is good news after so many discouraged workers stopped looking for jobs. The household survey reported a net increase of 410,000 jobs in October, after a gain of 873,000 jobs in September. The household survey typically shows stronger job growth earlier in a recovery, because it picks up self-employed individuals and workers at new businesses that are not part of the establishment survey.
A byproduct of the improving labor market was an uptick in consumer confidence in October. The Conference Board’s Consumer Confidence Index rose to 72.2 in October, the second consecutive monthly gain and highest level in more than four years.
Overall, the October indicators offer some positive momentum going into 2013. While considerable risks remain – highlighted by the impending federal fiscal cliff – the economy is expected to continue its gradual recovery. If policymakers can successfully avoid the fiscal cliff and agree on a plan for longer-term fiscal sustainability instead of short-term fixes, economic growth is likely to improve during the second half of 2013.
U.S. Private Sector Job Growth
Source: Bureau of Labor Statistics, Establishment Survey; figures are seasonally-adjusted
For additional analysis of restaurant industry trends, log on to Restaurant TrendMapper (subscription required).