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The U.S. economy created more jobs than expected in October, and the unemployment rate fell sharply, although Americans continue to grapple with Covid-19 and its dampening effects on business.

The Labor Department reported Friday that the number of non-farm workers rose by 638,000 and the unemployment rate was 6.9%, both better than expected as 530,000 additional jobs and an unemployment rate of 7.7%.

CNBC examined the net changes in industry for October jobs based on the data included in the employment report.

The leisure and hospitality industries continued to recover from the coronavirus and sought to curb widespread spending in restaurants, hotels and bars earlier in the year.

The sector, which created 271,000 jobs last month, saw about 80% of that growth in hiring restaurants and bars, despite the US setting records for new daily Covid-19 infections. Despite the stronger October on the labor market, employment was 10.1 million or 6.6% below the February level.

While much of the month's uptrend came from the food service industry, some of the biggest losses came from the public sector. Government employment declined by 268,000 at the federal, state and local levels.

Government hiring has been troubled in recent months due to a combination of volatility in federal hiring for the 2020 census and weak demand for public school and university workers.

At the federal level, the Ministry of Labor announced that government employment had declined by 138,000 thanks to a loss of 147,000 temporary workers in the 2020 census. At the state and local levels, employment in education fell by 61,400 and 97,800 respectively.

The professional and business services sector was a bright spot in October, with net jobs adding 208,000. The government said about half of that gain was due to hiring temporary workers.

Employment also increased in building and housing services (+19,000), computer systems design and related services (+16,000), and management and technical advisory services (+15,000).

"During the month there were notable increases in employment in the leisure and hospitality, professional and business services, retail and construction sectors," the government said in a press release.

"Retail has created 104,000 jobs, nearly a third of the profits in electronics and housewares stores (+31,000)," added the Labor Department. Employment also rose in auto and parts dealers (+23,000), furniture and home decor stores (+14,000), clothing and apparel accessory stores (+13,000), general stores (+10,000) and retailers (+9,000). "

– CNBC's Nate Rattner and Crystal Mercedes contributed to the coverage.

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