November Payrolls Surge Much More Than Expected

This week’s weak payrolls report from ADP had the market bracing for low payrolls numbers on Friday after signaling contraction in manufacturing, commodity producers and retailers. ADP’s Mark Zandi even said that the jobs market is losing its shine. The U.S. Bureau of Labor Statistics (BLS) just doesn’t seem to agree.

The BLS’s Employment Situation report showed that the economy added 266,000 nonfarm payrolls during November. That was about 80,000 better than expectations, and those expectations should have been even lower after the terrible ADP report. The private sector was responsible for 254,000 of the November job gains, with the government adding just 12,000 jobs.

One issue that may have played a role in the numbers would have been the end of the GM strike, with the BLS adding in that manufacturing payrolls rose after the return of workers from a strike. That appears to have added roughly 50,000 to the payrolls gains. The agency further noted that job gains were seen in health care and in professional and technical services.

Another bright spot for the economy was that the official unemployment rate fell to 3.5% from 3.6%.

The average hourly wage in November was up seven cents, or 0.2%, from October to $28.29 per hour. Wages were 3.1% higher than a year earlier, but down marginally from the 3.2% annualized gain seen in October. The average workweek was unchanged at 34.4 hours.

Upward revisions were also made for the prior two months of payrolls reports. The BLS lifted October’s gain to 156,000 from 128,000, and September’s payrolls rose to 193,000 from 180,000.

The labor force participation rate was 63.2% in November, and the employment-population ratio was 61.0% for the third consecutive month.

The strong jobs number may have caught Wall Street off guard. ADP does not always reflect the total gains or losses in the jobs market, but it has tended to be used as a barometer for strength or weakness. On last look, the Dow Jones industrials were up almost 270 points and the S&P 500 was up more than 26 points.