According to Friday’s Labor Department report, US economy produced far fewer jobs in November than was expected. This is a signal that even before the Covid threat, hiring began to slow.
Payrolls for nonfarm workers increased by just 210,000 for the monthEven though unemployment fell to 4.2% from 4.6% in March, it was still higher than the labor force participation, which rose to 61.8% for the month. It is now at its highest level since March 2020.
Dow Jones estimated 573,000 jobs, and 4.5% unemployment for an economy suffering from a labor shortage.
Unemployment, which also includes people who have been discouraged or are working part-time because of economic reasons, dropped further, to 7.8% (from 8.3%). With an increase of 594,000 people working, the household survey showed a better picture with an additional 1.1 million jobs.
Nick Bunker from Indeed, the economic director of research said that “this report is a tale about two surveys”. The household survey shows an acceleration in employment gains and workers returning to work, as well as low levels of voluntary part-time jobs. A significant slowdown is seen in the job growth rate, especially in COVID-affected areas.
He said, “The labor market’s underlying momentum is strong but there are more uncertainties than anticipated.”
After being an important job generator for much of the recovery, leisure and hospitality saw only 23,000 jobs gain. Although the sector has recovered nearly 7 million jobs that were lost during the worst of the pandemics, the unemployment rate is still at 7.5%.
Initially, the markets ignored the disappointing results. but then turned negative after the open.
The initial job count for this year has seen significant revisions. Months with low numbers initially were often bumped up to higher levels. Friday’s release of the report showed that both October and September were revised by 82,000.
The largest gains were seen in professional and business services (90,000.), transport and warehousing (50.000) and construction (31,000). Retail saw a drop of 20,000 despite the approaching holiday shopping season.
The month saw worker wages rise by 0.26% and 4.8% respectively, compared to a year earlier. These numbers are slightly lower than the estimates.
Fed open to changing policy
The employment numbers have been closely monitored by policymakers to determine how close the economy has come to full recovery. the pandemic. After the Covid-19 explosion, America experienced the shortest and steepest recession. It has since been volatile, but its trajectory is still progressive.
Federal Reserve officials have added another wrinkle to this picture by saying that they may end the support measures for growth they put in place last week.
This was the testimony of Fed Chairman, earlier in this week. Jerome PowellHe stated that he anticipates central bank’s policy commission to address the topic at their meeting this month stepping up the level at which it is taperingThe company purchases monthly bonds. Powell indicated that Powell expects the unwinding of the bonds to be completed “a few months sooner” than expected. This would make it possible for interest rates to rise.
Andrew Hunter, senior U.S. economist, wrote that the disappointing 210,000 increase in nonfarm payrolls for November suggested the labor market recovery is in a rut even before Omicron’s potential effects. This could be due to rising infections rates in the Northeast, Midwest, and Midwest. “Despite this, the Fed will continue to push forward with plans for an acceleration of QE taper pace at its FOMC meeting in November.”
Mary Daly, President of San Francisco Fed, backed Powell’s remarks in comments Thursday. She said that inflation that is stronger and more durable than expectedIt is forcing us to think about rethinking our policy. She suggested that the Fed “at the very least” consider raising interest rates and speeding up the pace of taper.
Daly suggested that Daly’s summary of economic projections, which will be published this month and in which officials share their future expectations, could point to an increase in interest rates for 2022. Markets expect that the Fed will enact at most two quarter percentage points increases in next year.
James Bullard of St. Louis Fed added his voice on Friday. Bullard stated that the economy has completely recovered as measured by GDP and that it can function with less stimulus given the current pace of inflation.
Bullard explained that these considerations suggested, on balance and in favor of the Federal Open Market Committee removing monetary policy accommodation.
