Economists expected a job-creation boost of 573,000. The BLS reported that the US economy added well below half of that. Only 210,000 jobs got created in November, another in a series of disappointing results in an economy where millions of jobs have yet to be recreated more than a year after most of the pandemic shutdowns ended:
Total nonfarm payroll employment rose by 210,000 in November, and the unemployment rate fell by 0.4 percentage point to 4.2 percent, the U.S. Bureau of Labor Statistics reported today. Notable job gains occurred in professional and business services, transportation and warehousing, construction, and manufacturing. Employment in retail trade declined over the month. …
The unemployment rate fell by 0.4 percentage point to 4.2 percent in November. The number of unemployed persons fell by 542,000 to 6.9 million. Both measures are down considerably from their highs at the end of the February-April 2020 recession. However, they remain above their levels prior to the coronavirus (COVID-19) pandemic (3.5 percent and 5.7 million, respectively, in February 2020).
One bright spot came in the labor participation rates. Both measures did tick upward, but not by a lot:
The labor force participation rate edged up to 61.8 percent in November. The participation rate is 1.5 percentage points lower than in February 2020. The employment-population ratio increased by 0.4 percentage point to 59.2 percent in November. This measure is up from its low of 51.3 percent in April 2020 but remains below the figure of 61.1 percent in February 2020.
So much for the ADP report on Wednesday, which came in right around analyst expectations for the BLS report, but ADP hasn’t been entirely predictive the last few months. Their projection of 534,000 jobs added last month was pretty much equal to their projections for October and September, but didn’t match up well with BLS reporting in those periods.
Notably, however, ADP reminded its readers that the jobs market was still five million short of the pre-pandemic employment level, and that’s without accounting for population growth. Official BLS numbers put the figure at 3.9 million, but again, that’s a static figure that only accounts for the population as of February 2020. Assuming that we need to add 120,000 jobs a month to keep up with 2.5 million additions to US population a year at a 62% labor participation rate, that’s an additional 2.52 million jobs over the 21 months since February 2020 and the beginning of the shutdowns. That puts our target at more like 6.4 million jobs in the hole.
That’s the lowest month total in nearly a year, and there’s no particular outside event driving the disappointment. NPR points out that job creation was expected to slow in December as steps get taken to mitigate against the Omicron variant of COVID-19. Now it looks like job creation had already slowed before anyone knew of a new variant:
Leisure and hospitality, which has been a bellwether throughout the pandemic, added just 23,000 jobs last month.
“Firms are still struggling to find workers in the sector,” said Nela Richardson, chief economist at the payroll processing firm ADP. “And the sector is also quite vulnerable if there is a resurgence of the pandemic.”
The jobs report is based on surveys conducted about three weeks ago, before the first cases of the omicron variant were detected in South Africa. Health experts don’t yet know how contagious the new strain is or how effective vaccines will be against it. But the delta wave over the summer illustrates how a rise in infections can reduce both demand for workers and the number of people willing to work.
“We saw in a very real way a slowdown in hiring as a result of the delta variant,” Richardson said. “There were fewer people going to restaurants. Fewer people traveling. And that had an impact on hiring. It likely had an impact on fewer people deciding to come back into the labor market.”
This will come as a rude shock to the White House, which used better numbers from September and October to promote Joe Biden’s economic policies. Earlier this week, Biden himself claimed to have created 5.6 million jobs this year in a record expansion of the workforce, but that’s simply not true. The jobs being created now are replacements for those destroyed by government-imposed shutdowns last year, mainly in the first and second quarters of 2020. We are now in the fourth quarter of 2021 and we’re still around six million jobs short of where would otherwise be by now, and it looks as though the economy is stalling well short of a jobs recovery.
Is this the last word on November? CNBC’s Squawk Box doesn’t think so:
"In the 25 years of doing this … I've never said this before: I don't believe the topline number. We have had a consistent situation of the BLS underreporting the payroll number," says @steveliesman on November jobs report. "I'm just not a believer here." pic.twitter.com/hmS7sBm66t
— Squawk Box (@SquawkCNBC) December 3, 2021
The revisions have mostly gone upward this year, it’s true, but only in one month was that statistically significant. It’s very unlikely that we’ll see a revision of this relatively poor November number into some blockbuster level of job creation. Even if it went up by 50%, we’re still talking about 320,000 jobs in an environment where we need to add 500K or more to make up the ground we lost more than a year ago. And even at that rate, it would still take us almost another two years to finally catch up. It’s not enough at either rate.