U.S. job gains beat forecast, but analysts say some numbers are troubling
Share with others:
The national unemployment rate dropped in November to 7.7 percent from October's rate of 7.9 percent as employers added 146,000 jobs in the month, beating economic predictions of a gain of 93,000 jobs.
It was the lowest the unemployment rate has been since December 2008, but despite that, economists noted that the rate was falling for the wrong reasons.
Nigel Gault, an economist with IHS Global Insights in Lexington, Mass., said that while the report was better than expected, it was just another month of anemic growth.
He noted that payrolls for September and October were revised downward by 49,000 -- 48,000 of which were government jobs.
"I know it's puzzling that government is incapable of measuring how many government workers there are, but there it is," he said.
And for all the noise about the so-called fiscal cliff, Mr. Gault said the threat of tax increases and budget cuts does not seem to be affecting payrolls.
Each of the major stock indexes opened up on the news, although they closed mixed. The Dow Jones industrial average was up 81.09 points, or 0.62 percent, to close at 13,155.13 for the day. The Standard & Poor 500 index was also up 4.13 points, gaining 0.29 percent, to close at 1,418.07, but the Nasdaq closed at 2,978.04, a 0.38 percent decline, losing 11.23 points.
A statement from Alan B. Krueger, chairman of the White House Council of Economic Advisors, said Friday's report "provides further evidence that the U.S. economy is continuing to heal from wounds inflicted by the worst downturn since the Great Depression."
He said the most pressing need now is to extend the middle-class tax cuts that have already passed the Senate.
To Heidi Shierholz, an economist with the Economic Policy Institute in Washington, which has been advocating more stimulus spending to improve the employment numbers, the more pressing problem is that the emergency unemployment insurance extension is set to expire at the end of the month unless it is reauthorized by Congress.
In a written commentary on the government numbers, she said that if the extension is not reauthorized, the economy will lose an additional 400,000 jobs because of reduced spending by families that depend on unemployment compensation money.
While the headline numbers looked good, the underlying currents of the monthly report from the Bureau of Labor Statistics remain troublesome as the number of people who have dropped out of the labor force continues to grow. The number of people in the population survey who said they were employed dropped by 122,000 and the size of the labor force fell by 350,000.
The report shows that the number of people who are unemployed fell by 229,000 to 12 million. That is roughly in line with additional 230,000 people who reported they were not in the labor force but want a job.
The number of people who were unemployed for more than six months declined by 216,000 people to 4.8 million.
A statistical look at changes in employment status showed more people leaving the labor force than obtaining work in November.
Ms. Shierholz noted that the labor force participation rate, which is the percentage of people who are either working or looking for work, was at 63.6 percent, just one tenth of a percentage point higher than its lowest point in the recession.
But more troublesome, she said, is that the participation rate of workers between 25 and 54, prime working years, fell to 81.1 percent in November from 81.6 percent in October and is now the lowest it has been since the start of the recession.
The Bureau of Labor Statistics noted that Hurricane Sandy, which was expected to have depressed the number of jobs during the month, turned out not to be a factor in national employment.
Since the first of the year, the average monthly job gains have been running at 151,000, but over last three months that dropped to an average of 139,000 new jobs a month.
The report showed that manufacturing lost 7,000 jobs during November. That sector, which is a broken down by durable and nondurable goods, saw a reduction of 18,000 jobs manufacturing nondurable goods. Food manufacturing was down by 12,300 workers, with a subsector pulled down by the loss of 18,000 jobs at bankrupt Hostess Brands.
Durable goods jobs were up overall by 11,000, with 9,700 more jobs in the auto industry. Those gains did not carry over into the production of primary metals, such as steel and aluminum, which lost 1,700 jobs.
Government jobs also were down, with 1,000 fewer employees in November than in October even as state governments added 6,000 jobs and local governments added 1,400 municipal jobs. That was offset as local schools cut 3,100 jobs and the federal government slashed 5,000 workers.
Private education and health services experienced a net gain of 18,000 jobs, with educational services down 3,700 jobs and health care up 22,000 jobs; 8,300 of those jobs were in hospitals.
In advance of the holiday season, retailers added 52,600 jobs, with 33,000 of those in clothing stores.
First Published December 8, 2012 12:00 am