Jobs Report Reax: It Could Be Worse

Recovery_Calculated_Risk

Unemployment hit a low of 7.7% in November - the lowest point since December 2008 – the Bureau of Labor Statistics announced this morning, down from 7.9% the previous month. Despite the impact of Sandy, November saw the creation of 146,000 new jobs, nearly two times more than what analysts expected. However, the long-term unemployment rate moved little, with nearly 4.8 million people out of work for 27 weeks or longer, making up 40% of the overall number of unemployed. Derek Thompson summarizes the data:

[T]his was a pretty average jobs report. But if the numbers hold — in light of Hurricane Sandy and the fiscal cliff and trouble with manufacturing in response to iffy global demand — this pretty-average report amounts to better-than-average news for the economy heading into 2013.

Felix Salmon argues that "the employment emergency is over":

America should have millions more people at work than it does, and there’s a very strong case, looking at levels alone, for further economic stimulus to help us further in the right direction. But there’s something oxymoronic about the concept of a permanent state of emergency. And in terms of how strong the recovery feels, first derivatives are just as important as levels: if unemployment has fallen from 8.7% to 7.7% in the past year, that feels better than an economy where unemployment has risen from, say, 6.1% to 7.1%.

James Pethokoukis underscores the anemic wage-growth trends:

In November, average hourly earnings for all employees on private nonfarm payrolls rose by 4 cents to $23.63. Over the past 12 months, average hourly earnings have risen by 1.7%. Unfortunately, inflation — as measured by the consumer price index — has risen by 2.2% over the past year, meaning average hourly earnings have fallen by 0.5% in real terms.

He adds that job creation is "far too slow to get the labor market back to pre-recession levels or boost wages."  Jared Bernstein's view:

[F]actoring in today’s report, the average pace of payroll growth over the past three months is about 140,000 overall and 150,000 in the private sector. That pace is consistent with an economy growing at a decent clip and with a slowly declining unemployment rate.  It is not, however, fast enough job growth to quickly reduce the large gaps in output, employment, and earnings that continue to hold back working families.

Greg Ip weighs in:

It seems likely that ongoing structural restraints are depressing the size of the labour force: early retirement, more of the unemployed giving up the job hunt, perhaps even shrinking immigration. As Jared Bernstein recently noted, this spells trouble not in the short term but in the long term, because it undermines America’s potential growth rate.

Phil Izzo wonders whether Sandy wasn't responsible for the lower-than-expected unemployment rate:

The definition of unemployed is that the person was was looking for a job and was available to work during the reference week. An unemployed person volunteering in Sandy cleanup may not tell a surveyor that he’s available for work, and is then counted as out of the labor force.

Tim Iacono breaks down sector trends in the report: 

[R]etail hiring was a major factor in the most recent payroll gains – up 53,000 overall paced by a surge of 33,000 at clothing stores – suggesting that seasonal adjustments are again playing an outsized role this holiday season. Retail employment has increased by 140,000 over just the last three months.

He also notes where the economy is shedding jobs:

Construction jobs declined by 20,000, manufacturing employment fell by 7,000, and a decline of 1,000 in government payrolls rounded out the declining categories as modest hiring at the state level was more than offset by job losses at the federal and local level.

Bill McBride homes in on the government data:

[A] key theme we've been discussing is that we are nearing the end of state and local government layoffs … This has been ongoing for over 3 years, and it appears the drag from state and local governments is mostly over. Of course, employment at the Federal level is still shrinking, and everyone expects more austerity in 2013.

Yglesias is baffled by the construction number:

[T]he divergence between new housing starts and residential construction employment looks to have been going on for months now…. So what's going on? Is something being mis-measured? Is the construction industry experiencing a productivity boom? Are hours per worker surging but firms aren't adding staff for some reason?

Brad Plumer notes the possible impact of Sandy behind the construction-jobs drop-off:

About a million workers said they were working part time rather than full time because of “bad weather.” And the economy lost 20,000 construction jobs. In theory, those jobs should come back as post-hurricane rebuilding gets underway. But it makes the underlying trend more difficult to pick out. 

Emphasizing that "untold numbers of Americans remain stranded in chronic joblessness," Greg Sargent spells out the significance the jobs report should have on the current political agenda:

Some Dems in Congress were planning to seize on today’s jobs numbers to renew the push for more stimulus in any fiscal cliff deal — an extension of unemployment insurance and the payroll tax cut, and more infrastructure spending to boost the economy. The fact that today’s jobs numbers were more decent than expected should not change this. Millions of Americans are still suffering.

(Chart from Calculated Risk.)