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Unemployment Rate 4.2%, Jobs Strangely Low

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Friday, December 3, 2021

The nonfarm payroll report from the Bureau of Labor Statistics (BLS) from the U.S. government for the month of November is out this morning, providing a head-scratcher of a number: 210K total nonfarm jobs were filled last month in the U.S. — well off expectations for around 550K, and about 2 1/2x lower than October’s upwardly revised 546K. Meanwhile, the Unemployment Rate fell to 4.2% for the month, below where it was in March 2020.

This 210K headline is also at odds with Wednesday’s private-sector payroll headline from ADP ADP, which was a better-than-expected 534K. In today’s BLS report, the private sector reportedly brought in only 235K new jobs, with a loss on the government-employment side. It’s also at odds with the trailing 3-month average jobs gains, which was 466K. The 3-month average prior to that? 889K — more than 4x today’s figure.

Further, Labor Force Participation actually rose in the month, to 61.8% — a “post-pandemic” high. The U-6 (aka “real unemployment”) also hit lows not seen in the pandemic era, 7.8%. Unemployment came in 30 basis points lower than the previous month, another thing that fails to gibe with the 210K headline. And finally, revisions to previous months — especially late summer/early fall — were significant to the upside. We expect at least some economists to expect the same thing for November.

Professional/Business Services led the way with 90K new hires last month, followed by Transportation/Warehouse positions at 50K — likely to do with holiday shopping supply. Both Construction and Manufacturing brought in 31K new jobs each, both solid figures for a growing economy on the goods-producing side.

Retail, however lost -20K jobs last month. Perhaps most strangely of all, the Leisure/Hospitality space fell to beneath levels in goods-producing jobs, after leading all sectors for most months of the past year or more. Have restaurants and hotels already done all the hiring they’re going to do? In an industry with historically high turnover rate, this seems unlikely.

We now have put 18.5 people to work since April 2020, which is still down -2.6% — roughly 3.9 million potential employees — from pre-pandemic levels. This means there is still work to do in the labor force, and the potential remains as long as those jobs are in need of filling. If there is a silver lining with this morning’s disappointing headline, it’s that it leaves plenty of room for increased jobs growth in the month(s) to come.

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