November Employment Report

The headline numbers for November’s unemployment report put out by Bureau of Labor Statistics were rather encouraging.  The number most people pay attention to, the unemployment rate, fell to 7.7 percent from 7.9 percent in October.  The nation added 146,000 jobs in the month as well.  Hourly earnings improved by 0.2 percent, and the average workweek held steady at 34.4 hours.

Data beneath the headlines was a little more mixed.  First, private payrolls increased by 147,000 in November, but September and October payrolls were revised down by a total of 49,000 jobs.  But, as Since payroll cost are the largest expenditure a company has, employers apparently felt confident enough to increase their hiring.  Still, the private payrolls data was split.  While the service sector added 169,000 workers for the month, goods producing firms decreased their number over employees for the second month in a row (22,000 jobs lost in November) after showing zero growth in September.  This is worth noting since manufacturing is more sensitive to the business cycle.  As noted above, the unemployment rate fell, but it did so primarily because 350,000 Americans left the workforce.

The country’s employment situation is improving, but it is not healthy.  This is not out of line with other recoveries in the sense that employment is a lagging indicator.  Employers are always reluctant to bring on the next worker because of the costs associated with hiring.  Before adding to the payroll, they want to make sure their investment is worth the upfront costs.  Companies seem to be additionally unsure about these expenses because of the fiscal tug-of-war going on inside the Beltway.  Currently, there is some payroll progress being made, but it is not at a pace commensurate with a strong economy.     (by C. Cox)