- Non-farm payroll increases by 210,000 in November
- Unemployment rate drops to 4.2% from 4.6%
- Average hourly earnings up 0.3%; the working week increases to 34.8
WASHINGTON, Dec.3 (Reuters) – Job growth in the United States slowed significantly in November due to job losses in retail and local public education, but the unemployment rate plunged to a 21-month low of 4.2%, suggesting the labor market is tightening quickly.
The four-tenth of a percentage point drop in the unemployment rate since October reported by the Labor Department in its closely watched employment report on Friday came even as 594,000 people entered the labor market, the most in 13 months. Workers are working longer hours, raising overall wages, which should help support consumer spending.
“Don’t be fooled by the meager gain in paid jobs this month, as the engines of the economy are actually overloaded, as falling unemployment shows,” said Christopher Rupkey, chief economist at FWDBONDS At New York.
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The business survey showed that the non-farm payroll increased by 210,000 jobs, the least since last December. But the economy created 82,000 more jobs than initially announced in September and October, a sign of strength. This left employment 3.9 million jobs below the peak of February 2020.
Despite the slowdown in hiring in November, which also reflects a slight gain in the leisure and hospitality industry, 6.1 million jobs were created this year. The unemployment rate has fallen 2.1 percentage points since January.
President Joe Biden, whose approval ratings plummeted amid angst over high inflation, said the economy was stronger than it was before the COVID-19 pandemic and that the nation could “look forward to a brighter and happier new year to come”.
“But I also know that despite this progress, families are worried about COVID. They are worried about the cost of living, the economy more broadly,” Biden said in a speech on the economy. “I want you to know that I hear you, it’s not enough to know that we are making progress.”
Economists say the economy is very close to peak employment, making an anticipated increase in Federal Reserve interest rates possible.
Fed Chairman Jerome Powell told lawmakers this week that the U.S. central bank should consider speeding up the liquidation of its massive bond purchases at its December 14-15 policy meeting.
“The Fed will view the report as more than enough to stay the course to accelerate the reduction in asset purchases at the December meeting, implying the end of purchases in March,” said Andrew Hollenhorst, chief US economist at Citigroup At New York. âPlus, an unemployment rate that is on the verge of falling below 4.0% perhaps in the next few months holds a first Fed rate hike firmly on the table in June or even earlier.â Economists polled by Reuters had predicted that the wage bill would increase by 550,000 jobs. Hiring continues to be hampered by the labor shortage. There were 10.4 million vacancies at the end of September.
US stocks were down sharply. The dollar (.DXY) remained stable against a basket of currencies. US Treasury yields have fallen. Read more
TIGHT LABOR SUPPLY
Job growth was held back by a decline of 20,400 jobs in the retail sector. State and local education employment fell by 12,600 jobs. This resulted in a decline of 25,000 government-wide jobs, the fourth consecutive monthly decline.
Staff fluctuations linked to the pandemic have distorted normal seasonal patterns in state and local government education.
The leisure and hospitality sector created only 23,000 jobs against 170,000 the previous month. The payroll for professional and commercial services increased by 90,000 jobs. Strong gains were also recorded in transportation and warehousing and construction. Manufacturing employment increased by 31,000 jobs.
Modest job growth in November did little to dampen expectations that the economy was poised for stronger growth this quarter after hitting a slowdown in the third quarter.
A measure of service sector activity hit a new record in November. Read more
Consumer spending and manufacturing activity in the United States were strong. Spending is expected to remain supported by rising wages as businesses scramble to find scarce workers. The average hourly wage rose 0.3% in November, keeping the annual wage increase at 4.8%. The average work week fell from 34.7 hours to 34.8 hours. Due to the lengthening of the working week, overall wages increased by 0.7%.
But the spread of the highly contagious new Omicron variant of COVID-19 poses a risk to improving the image. While little is known about the impact of Omicron, some slowdown in hiring and demand for services is likely, based on experience with the Delta variant, which has been developed. origin of the slowest rate of economic growth for more than a year in the last quarter.
While labor supply remains tight, there are signs that some of the millions of Americans who lost their jobs during the pandemic-induced recession are returning to the workforce.
The smallest household survey, from which the unemployment rate is derived, showed that the labor force participation rate, or the proportion of working-age Americans who have or are looking for a job, was 61.8%. This was the highest level since March 2020 and was up from 61.6% in October.
The increase was concentrated in the 20-54 age group. About 274,000 women aged 20 and over have joined the workforce. The workforce remains 2.4 million below its pre-pandemic level.
“If more people start looking for work again, it would allow for stronger short-term hiring,” said Gus Faucher, chief economist at PNC Financial in Pittsburgh, Pa.
The household survey also showed an increase of 1.14 million in the number of people employed. The employment-to-population ratio, seen as a measure of an economy’s ability to create jobs, jumped to 59.2%, also the highest since March 2020, from 58.8% in October.
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Reporting by Lucia Mutikani; Editing by Chizu Nomiyama and Paul Simao
Our Standards: Thomson Reuters Trust Principles.