November Unemployment Hits Post-Recession Low, With Caveats

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Friday’s only real economic report of much consequence was the U.S. Department of Labor’s employment situation report. It turns out that the official unemployment rate for November dropped to a post-recovery low of 4.6%, and nonfarm payrolls totaled 178,000. Private sector payrolls rose by just 156,000 in November.

Dow Jones was calling for 180,000 nonfarm payrolls in November. Bloomberg predicted 170,000 nonfarm payrolls and for private sector payrolls to be 155,000.

Note that there were revisions on past numbers. October’s nonfarm payrolls figure was revised down by 2,000 to 142,000, and September’s reading was revised to a gain of 208,000. Private sector payrolls in October were raised to 135,000 from 142,000.

Where things get difficult in this report is in the driving forces. ADP had indicated some of the same muted tone ahead of the formal Labor Department report.

Average hourly earnings fell by 0.1% rather than growing by the 0.2% that Bloomberg had called for. All economists who were polled by Econoday expected hourly earnings to rise. Maybe the larger gain from October pulled away from November’s numbers. The average workweek was 34.4 hours in November, as expected by Bloomberg, and matching October’s level.

More people dropped out of the workforce as the labor force participation rate fell to 62.7% in November from 62.8% in October.

Another measurement in unemployment is the U3 figures. This is the unofficial unemployment rate (or what some consider the real unemployment rate), and it considers those people who have stopped hunting for a job and those working part-time jobs who really want full-time ones. This fell to 9.3% in November from 9.5% in October, the lowest level since April of 2008.

Friday’s Bureau of Labor Statistics report further said:

The number of job losers and persons who completed temporary jobs edged down by 194,000 to 3.6 million in November. The number of long-term unemployed (those jobless for 27 weeks or more) was little changed at 1.9 million and accounted for 24.8 percent of the unemployed. Over the past 12 months, the number of long-term unemployed was down by 198,000.

In November, 1.9 million persons were marginally attached to the labor force, up by 215,000 from a year earlier. (The data are not seasonally adjusted.) These individuals were not in the labor force, wanted and were available for work, and had looked for a job sometime in the prior 12 months. They were not counted as unemployed because they had not searched for work in the 4 weeks preceding the survey.

Among the marginally attached, there were 591,000 discouraged workers in November, little different from a year earlier. (The data are not seasonally adjusted.) Discouraged workers are persons not currently looking for work because they believe no jobs are available for them. The remaining 1.3 million persons marginally attached to the labor force in November had not searched for work for reasons such as school attendance or family responsibilities.