Reporter's Notebook

Restaurants added lots of jobs in October

The restaurant industry had a good month in October. Traffic grew for the first time in well over two years. And restaurateurs are hiring more people.

According to the latest government employment data, the restaurant industry added 42,000 jobs in October. This was a strong dose of hiring, 61 percent better than the 26,000 jobs the industry added on average during the past 12 months. 

Let's put it another way: Employers added 214,000 jobs in October. So one out of every four jobs added last month was in an eatery.

It's not difficult to figure out why. While sentiment among restaurant owners weakened some in September, according to the National Restaurant Association, it was still pretty positive. And in October the industry finally started bringing in additional customers

According to the latest survey from Black Box Intelligence, traffic increased 0.4 percent in October. It was the first positive month for traffic since February 2012.

And in a note this morning, Baird Analyst David Tarantino said that 71 percent of private chains he surveyed said their same-store sales improved in October, relative to September, and only 12 percent said trends were worse. While those were early results, they still point to improved momentum.

The guess here is that lower gas prices and improved employment are finally starting to move the needle in the restaurant industry and operators are adding workers as a result.

Employers have steadily added jobs over the past five years. Since unemployment peaked at 10 percent in October 2009, the rate has steadily declined, falling to 5.8 percent last month. While the addition of 214,000 jobs last month could hardly be called a "surge" it's still a continuance of the steady pace over the past several years. And, we'll note, the Bureau of Labor Statistics revised its August and September surveys upwards by 31,000 jobs. In short: More people are working. And more working people are prone to eat out more.

Despite that employment growth, wages still aren't rising, and that should give the industry some pause. Wages increased by just 2 percent, suggesting that workers don't quite have enough negotiating power in the current job environment to drive their pay higher. And many jobs being added aren't in high paying industries. Indeed, more than one out of every three jobs added in October was either at a leisure and hospitality business or a retailer.

If the restaurant industry is to get strong, broad-based growth, wages need to improve faster than that. Nevertheless, it appears that the year should end on a positive note for restaurants.

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