Ugly Job Report Shocks Experts, Official Rate Hits 9.8%
Non-farm payroll employment in November came in far lower than expected, according to today's job report from the Bureau of Labor Statistics. The expert consensus of analysts surveyed by Bloomberg had estimated that 168,000 total jobs were added last month. But the seasonally adjusted BLS report put that number at 39,000. The private sector added 50,000 jobs, also well below expectations of 160,000. Government at all levels laid off 11,000 workers.
The number of Americans officially unemployed rose to 15.1 million.
Many analysts are nonplussed because today's numbers don't mesh with recent positive economic news.
Job numbers for September were revised upward to minus 24,000 from minus 41,000, and for October upward from 151,000 to 172,000. Many analysts expected today's report might come in far higher than even the consensus after a Wednesday report by ADP showed far more private-sector jobs had been created in November than it had predicted. Total job creation since December 2009 has risen an average of 86,000 a month.
Despite the increase in jobs, the unemployment rate, which is calculated by a different survey, rose to 9.8 percent, presumably because out-of-work Americans who had dropped out of the labor force have been lured back in by news that the situation is improving. The civilian labor force participation rate, which has been drifting downward for the past three years, remained at 64.5 percent.
The number of workers who have been unemployed for six months or more rose from 6.2 million to 6.3 million. U6, the alternative measure that includes underemployed workers and some of those who have dropped out of the labor market because they can't find a job, remained at 17 percent.
While many analysts have grown more optimistic about the economy in the past couple of months because of good economic news on several fronts, it's still widely believed that the unemployment rate will be above 9 percent at the end of 2011, and above 8 percent at the end of 2012. The Federal Reserve Board's Beige Book released Dec. 1 indicated a solid strengthening of the economy in most areas but three – real estate and construction, which remain very weak, and employment, which it described as growing, but far too slowly. Today's employment numbers reinforce those pessimistic views.
The numerous reports throughout the month that gave reasons for guarded optimism included: Initial claims for unemployment benefits have shifted into a lower range after having been stuck at the same level as December 2009 for 10 months; the National Federation of Independent Businesses is showing a tiny positive number on jobs for the first time in years; the Institute for Supply Management reported the 16th consecutive month of growth, although at a slower rate; consumer confidence as measured by the University of Michigan's November rose more than forecast; pending home sales rose; light vehicle sales rose 17 percent in November to their highest level in 26 months (exclusive of the Cash for Clunkers program in August 2009; retail sales were well above predictions, according to The Wall Street Journalthis morning. Even private construction is on the upswing, but it remains devastatingly weak at more than 11 percent below 2009.
Ahead are a number of speed bumps. For one thing, the impact of the $787 billion stimulus package passed 21 months ago is fading fast and no longer contributes to growth although it still provides money for projects already under way.
Republicans want to redirect unspent stimulus money to other programs or for reducing the deficit. That would increase lay-offs. Moreover, according to Labor Secretary Hilda Solis, if the GOP manages to block the extension of unemployment benefits for people out of work for more than six months, it could potentially mean the loss of 500,000 or more jobs dependent on spending by the 5 million Americans who would lose their benefit checks.
But while these problems continue to get the headlines, underlying issues indicate a worrisome prognosis. These include the very low amount of money raised by IPOs this year compared with the money they sought, the low level of capital investment at this stage of the recovery compared with, say, the 1991 recession, the vast inventory "overhang" in housing and huge numbers of foreclosures.
In addition, there remain all the chronic problems we had before the recession: decades of stagnant wages; off-shoring of jobs; a weakly progressive income tax structure; our troublesome trade policy; a lack of industrial policy; inadequate private and government investment in infrastructure, innovation and basic research; and a continued dependence on oil four years after conventional sources of that fossil fuel peaked, according to the International Energy Agency.
Among other statistics from today's jobs report:
• The jobless rate: for adult men (10 percent); for adult women (8.4 percent); for teenagers (24.6 percent); for whites (8.9 percent), blacks (16 percent); Latinos (13.2 percent); Asians (7.6 percent). Rates for American Indians are larger than all these but not included because the government's survey sample is too small.
• The number of people employed part-time because they can't find a full-time position fell from 9.2 million to 9 million.
• The average workweek for all employees on private nonfarm payrolls held at 34.3 hours.
• In professional and business services, employment in temporary help services was up 40,000.
• Health care gained 19,000.
• Mining added 6,000 jobs.
• Retail trade fell by 28,000.
• Manufacturing fell 13,000.