WASHINGTON — America’s unemployment rate tumbled last month to its lowest point since the pandemic struck, even as employers appeared to slow their hiring — a mixed picture that pointed to a resilient economy that’s putting more people to work.
The government reported Friday that businesses and other employers added 210,000 jobs in November, the weakest monthly gain in nearly a year and less than half of October’s increase of 546,000.
But other data from the Labor Department’s report painted a brighter picture. The unemployment rate plummeted from 4.6% to 4.2% as 1 million Americans said they found jobs last month.
The U.S. economy still remains under threat from a spike in inflation, shortages of labor and supplies, and the potential impact of the omicron variant of the coronavirus. But for now, Americans are spending freely, and the economy is forecast to expand at a 7% annual rate in the final three months of the year, a sharp rebound from the 2.1% pace in the previous quarter, when the delta variant hobbled growth.
Employers in some industries — such as restaurants, bars and hotels — pulled back on hiring in November. By contrast, job growth remained solid in areas like transportation and warehousing, which are benefiting from the growth of online commerce.
The fall in the unemployment rate was particularly encouraging because it coincided with an influx of more that 600,000 job seekers into the labor force, most of whom quickly found work. Normally, many such people would take time to find jobs and would be counted as unemployed until they did. The government classifies people as unemployed only if they’re actively seeking work.
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“That’s good news for job seekers and workers, and for businesses too,” said Julia Pollak, chief economist at online jobs site ZipRecruiter. “It looks like the supply constraints are easing a bit with the unemployment rate low and wage growth high” — two factors that often encourage people to search for work.
President Joe Biden on Friday highlighted the drop in the unemployment rate, which he called “an extraordinary bit of progress.” Still, the slowdown in job growth, if it persists, will pose a challenge for Biden, who has received poor marks in a handful of public opinion polls for how he has handled the economy.
Though most indicators show the economy remains on the rebound, White House aides have privately expressed frustration that the president hasn’t earned credit for the improvement and instead is facing criticism over the spike in inflation and gas prices that have burdened Americans in recent months.
November’s report reflects a divergence in two surveys that the government conducts each month. The unemployment rate is calculated from a survey of households. For last month, this survey found that 1.1 million more people reported that they were employed than in October. A separate survey of employers, called the payroll survey, reported just 210,000 added jobs.
Though the results of the two surveys typically match up over the long run, they can differ sharply in any one month. For November, economists noted that the big employment gain in the household survey brought that figure in line with the larger increases in the payroll survey during previous months.
The hiring gains in the payroll survey have also been revised up substantially in recent months, and some economists suggested that this will likely happen again in coming months.
“My sense is the household estimate is closer to the truth around what is happening in the jobs market and … should anticipate a significant upward revision to the November data next month,” said Joseph Brusuelas, an economist at RSM, a tax and advisory firm.
The household survey — unlike the payroll survey– also captures self-employed and gig workers, whose ranks have grown steadily since the pandemic struck. Some economists attribute part of the nation’s labor shortage to an increase in people who have recently gone to work for themselves.
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Among them is Daniel Nolan of Raleigh, N.C. Like millions of other Americans, Nolan, 36, had his life and work upended by covid-19. His 9-year old son was in virtual school at the outset of the pandemic. And his father-in-law, ill with cancer, moved in with his family, prompting Nolan to leave his job as a software engineer at a private equity firm.
Nolan expected this period to last only a few months, but when he began looking for work again, the job offers he got weren’t what he was looking for. So in August, he decided to strike out on his own.
So far, Nolan said, he’s earning roughly the same income that he did before. He plans to keep consulting for at least two more years — and may never return to a corporate job.
“I’m able to make at least as much as I was making at my previous job and still have the flexibility of being a consultant,” he said.
JOB SECTORS DIVERGE
Leisure and hospitality, the sector hit hardest by the pandemic, had a particularly low month, gaining back only 23,000 jobs. It is still down 1.3 million jobs from February 2020.
Health care, down 450,000 jobs since the beginning of the pandemic, added back only 2,000 jobs. Hiring in other major industries, like wholesale trade and public and private education, was flat for the month.
The retail sector lost 20,000 jobs, with declines in general merchandise stores, clothing and clothing accessories stores; and sporting goods, hobby, book and music stores.
Some of the biggest gains were in professional and business services, which added 90,000 jobs; transportation and warehousing, which increased by 50,000; and construction and manufacturing, which each added 31,000 jobs for the month.
“The slowdown was largely driven by the service sector, which has both the largest remaining shortfall to pre-crisis jobs levels and has also carried jobs growth for the year,” said Daniel Zhao, senior economist at Glassdoor. “The delta wave is still lingering. We have seen improvement from the peak in September cases but are still at an elevated level. We can’t write off the effects of the pandemic on the labor market.”
SHADOW OF OMICRON
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.
Friday’s jobs data was collected before the emergence of the omicron variant.
The report showed that the number of unemployed Americans sank in November to 6.9 million, compared with the pre-pandemic number of 5.7 million. And average wages, which have been rising as employers try to attract or keep workers, increased a strong 4.8% from a year ago.
Even as the jobless rate has steadily declined this year, the proportion of Americans who are working or searching for jobs has barely budged, at least until this month. A shortage of job seekers tends to force companies to pay more to attract and keep employees. Higher pay can help sustain spending and growth. But it can also feed inflation if businesses raise prices to offset their higher labor costs, which they often do.
Whether the increase in job seekers continues is a critical question for the Federal Reserve. If the proportion of people in the workforce doesn’t rise much, it would suggest that the Fed is nearing its goal of maximum employment.
Information for this article was contributed by Chistopher Rugaber, Mae Anderson and Alexandra Jaffe of The Associated Press; by Eli Rosenberg of The Washington Post; and by Olivia Rockeman of Bloomberg News (TNS)
