U.S. Payrolls Growth Slowed in November While Jobless Rate Fell
U.S. job growth registered its smallest gain this year while the unemployment rate fell by more than forecast to 4.2%, offering a mixed picture that may nevertheless push the Federal Reserve to quicken the wind-down of pandemic stimulus.
Nonfarm payrolls climbed 210,000 in November after upward revisions to each of the prior two months, a Labor Department report showed Friday. The labor force participation rate edged up to 61.8%.
The median estimate in a Bloomberg survey of economists called for a 550,000 payrolls gain and for the jobless rate to fall to 4.5%.
The S&P 500 reversed earlier gains, with losses led by tech stocks. The dollar rose, while the yield on the 10-year Treasury edged lower.
The jobs report is composed of two surveys -- one of employers and the other of households. The employer survey, which determines the payroll and wage figures, showed hiring slowed across industries, including declines at automakers and retail outlets. The household survey, which determines the jobless and participation rates, showed employment surged by 1.14 million people and many came off the sidelines.
Even though payrolls growth slowed, the labor force participation rate -- the number of Americans either employed or looking for work -- edged higher. Still, it has mostly stagnated near levels from August of 2020, due in part to increased retirements and parents leaving jobs for child care purposes. Fed Chair Jerome Powell has said that there is still room for progress in both absolute levels of employment as well as participation.
Job growth could be further restricted if the recent emergence of the omicron variant of the coronavirus leads to new restrictions and keeps people from looking for work. Payrolls still remain 3.9 million below pre-pandemic levels.
While the headline number disappointed, the drop in the unemployment rate and the rise in labor force participation could help keep the Fed on track to possibly tighten policy faster than planned as inflation proves more persistent previously thought.
The central bank’s dual mandate requires that it weighs both price stability and maximum employment, and some policy makers fear that cutting off monetary support too soon could hurt the jobs recovery.
“We have to balance those two goals when they’re in tension as they are right now,” Powell told the House Financial Services Committee on Wednesday. “I assure you we will use our tools to make sure this high inflation we’re experiencing does not become entrenched.”
Several economists said after the report that the Fed will still likely accelerate the speed of tapering when officials meet later this month.
What Bloomberg Economics Says...
“With recent Fedspeak suggesting a more of a focus on controlling inflation, the November jobs report was decent enough for that to proceed. That would bolster the case for an early liftoff if inflation does turn out to be high” in the coming months.
-- Anna Wong, Andrew Husby and Eliza Winger, economists
To read the full research, click here
Average hourly earnings rose 4.8% in November from a year ago, though those figures are not adjusted for inflation. The average workweek rose to 34.8 hours in November from 34.7 hours a month earlier.
Employment in leisure and hospitality posted a small gain after large increases earlier in the year. Health care job growth was little changed overall, while nursing and residential care facilities continued to lead the decline in the industry’s employment throughout the pandemic.
Sectors such as professional and business services, transportation and warehousing, construction and manufacturing posted notable job gains. Such hiring could help ease supply-chain bottlenecks.
The household survey showed those entering the labor force quickly found work. Nearly 5 million people, the most since May of last year, went from out of the labor force to employed in November.
The unemployment rate for Black Americans fell by the most since October 2020, however that likely reflects a decline in labor force participation. The participation rate fell by 0.3 percentage point to the lowest since July.
For women ages 25-54, the participation rate rose to a pandemic high. That could signal child care issues are abating. Still, it remains 1.3 percentage points below the pre-Covid high.
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