The US economy proved surprisingly resilient in preliminary November job numbers, despite the effects of Hurricane Sandy, posting a gain of 146,000 jobs, and a drop in the topline unemployment rate to 7.7%. However, because of Sandy we should expect substantial revision to the numbers.
The Bureau of Labor Statistics claims that their survey response rates in the states affected by Sandy were “within normal ranges,” and that the storm “did not substantively impact the national employment and unemployment estimates for November.” This is hard to believe, especially because first-time jobless claims did show a spike from the storm. In addition, the winter months have seasonal adjustment issues around the holidays that in recent years have consistently shown a bias toward stronger job pickups. Neil Irwin has a read on these factors. Finally, the survey collection for the household survey was moved up a week, to move outside the Thanksgiving holiday. So the household survey and the establishment survey are actually measuring two different weeks. The regional and state estimates, scheduled for December 21st, will add some more clarity, as will the revisions in future months.
Given all of these factors, a drop in the unemployment rate in the household survey sounds pretty good. But two major indicators, the labor force participation rate and the employment-population ratio, dropped in November. This leads to the drop in the topline rate, as more people drop out of the labor force. Total employment in the household survey was “about unchanged” in November, so the drop in the labor force accounted for the entire drop in the rate. There are still 12 million unemployed persons, 4.8 million of whom have been out of work more than 27 weeks.
The establishment survey data showed downward revisions for September and October. September fell from 148,000 jobs to 132,000 jobs, and October fell more sharply, from 171,000 to 138,000. So that’s not great news, especially when the November data are so shaky. Over the year, employment has gained by 151,000 jobs per month, a slightly lower rate than the 153,000 monthly gain in 2011. We’re just bumping along.
Also, you must consider that the big winner for November was retail trade employment, with a gain of 53,000 jobs. This is completely natural for the holiday season. Professional and business services, health care employment, and motion picture and sound recording also did well.
Construction dropped by 20,000 jobs, a serious anomaly given all these reports about a housing recovery, particularly abut housing starts shooting up (even residential building construction fell). Manufacturing and mining were flat. Government jobs dipped by a minor 1,000 jobs, so state, local and federal austerity had little bearing on this report.
The average workweek was flat, but hourly earnings did rise by 4 cents, and have gone up 1.7% in the last calendar year.
Overall, it’s a report we cannot put a lot of stock in, because of the various seasonal and weather-related factors. There are some worrying signs in the internals, however.