November Jobs Report Sends Mixed Signals About U.S. Economy

By Nelson D. Schwartz and Talmon Joseph Smith, The New York Times

US employers reported weaker-than-expected hires last month. But a survey of American workers showed an increase in the number of people taking jobs.

These conflicting images emerged from a single government report on Friday, further clouding the economic outlook as a new phase of the coronavirus pandemic unfolds.

The Labor Department’s ambiguous data cloud the calculations of Federal Reserve policymakers wondering whether they should move from creating jobs to controlling prices. It’s a complication for a White House trying to show the success of its economic journey. And it offers little advice for businesses on what to expect in the months to come.

Granted, recent economic readings were already confusing. Consumer confidence readings have been at an all-time low even as Americans continue to spend. Inflation has reached levels not seen in decades, but investors seem unfazed.

Part of Friday’s puzzle arose because the Labor Department’s report is based on two surveys: one interviewing households and the other recording hires among employers.

The employer survey showed the addition of just 210,000 jobs in November on a seasonally adjusted basis, the weakest performance of the year. Economists had forecast a second consecutive gain of more than 500,000.

But good news abounded in the household survey, which showed the seasonally adjusted total number of employees jumped by more than 1.1 million. The unemployment rate fell from 4.6% to 4.2%.

“I don’t know if I have ever seen such an extraordinary gap between the two surveys,” said Diane Swonk, chief economist at the Grant Thornton accounting firm in Chicago.

The overall participation rate, which measures the proportion of Americans who have or are looking for a job, rose 0.2 percentage point to 61.8%, its healthiest level since the start of the pandemic . The rate of prime-age workers, aged 25 to 54, has also increased slightly.

There was a surge in participation last month among Hispanic men and women, who have been among the hardest hit by the pandemic.

Yet the lackluster number of hires was a reminder of the recurring trend in the labor market since the pandemic began almost two years ago. This month, job gains in companies where face-to-face contact is required – such as shops, restaurants, bars and hotels – have been particularly weak.

Retail trade employment fell 20,000 last month on a seasonally adjusted basis, while leisure and hospitality hiring rose 23,000, up from a gain of 170,000 in October . The white-collar sector, which largely ignored the worst effects of the pandemic, remained a source of strength, with an increase of 90,000 jobs in professional and business services.

Factory hires jumped 31,000, while transportation and warehousing gained nearly 50,000 workers, an indication of how e-commerce is gaining momentum ahead of the holidays.

Despite a fairly tight labor market, the economy still lacks around 4 million jobs compared to pre-pandemic levels. About a third of those positions are in the leisure and hospitality sector, which is vulnerable if the omicron variant of the coronavirus – which gained public attention after the November employment surveys – turns out be as threatening as the delta constraint.

“That’s the risk, but it probably won’t show until Christmas,” said Scott Anderson, chief economist at Bank of the West in San Francisco. “It could be a problem in the New Year. We are still grappling with the COVID pandemic, and the risks are there for the economy and for hiring. “

Many labor market analysts argue that there is a lot of room for job growth because so many people have not yet re-entered the labor market and because businesses are on the whole in a difficult position. solid financial position with the ability to increase both supply and payroll.

“For me, the most important question for the future of the economy is: will businesses improve jobs enough to inspire people to get back to work and face these higher risks? Said Aaron Sojourner, professor at the University of Minnesota and former economist at the Council of Economic Advisers for the two previous administrations. “The big wildcard is the virus and our public health efforts, and the second is the Fed and how they’re adjusting.”

Throughout the fall, the economic trajectory was characterized by mixed signals.

The “exit rate” – a measure of the number of workers leaving their jobs as a percentage of overall employment – has reached or neared record highs, suggesting that workers are confident they can navigate the labor market. work to find something better. But the University of Michigan survey of consumer sentiment has fallen to levels not seen since the slow recovery from the 2007-09 recession.

The report notes “the growing conviction of consumers that no effective policy has yet been developed to reduce the damage caused by soaring inflation.” Buyers face the highest inflation in 31 years. In October, prices rose 6.2% from the previous year.

Nevertheless, the markets remain relatively calm. The main stock market indices have reached impressive levels this year. And bond yields, which tend to rise in inflationary environments, remain near record lows, indicating that investors do not view inflation as a long-term threat to the economy or financial stability.

In recent days, Federal Reserve Chairman Jerome Powell has come under pressure from different political camps to focus more on price increases.

Critics of the Fed say the central bank’s ‘accommodative’ bond buying policies – which have kept borrowing costs low and led to a large and continuous increase in the money supply – have lasted too long and were irresponsible in light of an already aggressive emergency response. of Congress.

Fed officials, including Powell, still maintain that the price increases primarily reflect pandemic aberrations that will dissipate. But in testimony to Congress on Tuesday, Powell signaled a turning point between revitalizing the economy and keeping prices under control.

“The economy is very strong and inflationary pressures are high,” he said. “It is therefore appropriate, in my opinion, to consider concluding the reduction in our asset purchases.”

Economists are divided over the potential effect of a coronavirus wave in winter. Some say it could slow the economy down, dampening inflation, as it could inhibit in-person activity. Others say a new wave could raise prices further by complicating supply chain logistics.

John Williams, chairman of the Federal Reserve Bank of New York, told The New York Times on Wednesday that the new variant could “mean a little slower rebound overall” but “increase those inflationary pressures, in areas that are in high demand “.

For consumers, a potentially positive effect of renewed virus fears is the recent decline in energy prices, which have risen significantly this year. The peaks have been particularly intense for fuel oil – which is used for industrial and home heating – and for crude oil, which translates directly into gasoline prices at the pump.

One of the remedies for rising prices is to keep consumers’ take-home pay. And with many companies keen to attract workers, the wages of non-supervisory workers continued to climb. Average hourly earnings rose 8 cents in November, to $ 31.03, and are 4.8% higher than a year ago, although that rate is exceeded by the latest inflation figures.

This article originally appeared in The New York Times.

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