US jobless rate drops but crisis continues
The US unemployment rate slipped to a December 2008 low in November but the job market remains stuck in a grinding crisis, government data released Friday shows.
The US unemployment rate slipped to a December 2008 low in November but the job market remains stuck in a grinding crisis, government data released onFriday shows.
The Labor Department’s monthly jobs report was better than expected, with the jobless rate dropping to 7.7 per cent from 7.9 per cent in October and job growth picking up.
But the decline in the jobless rate was mainly due to people leaving the workforce, the department said.
And the improvement in job growth -- the economy added 146,000 jobs -- came after the department downwardly revised October’s initial estimate of 171,000, to 138,000.
The department also cut the September jobs number, slicing 49,000 jobs in total from the two months’ gain.
“The November payroll gain was in line with the current trend and suggests the labour market has shown no sizable change in conditions over the last 11 months,” Briefing.com analysts said.
The three-month average of 139,000 added jobs remained well below the estimated 250,000 pace needed on a sustained basis to significantly reduce unemployment.
“At the current pace, we would not see the economy returning to full employment for another decade,” said Dean Baker, co-director of the Center for Economic and Policy Research.
Superstorm Sandy, which pummeled the northeastern coast in late October, had less of an effect than expected by analysts, whose average estimate was for the jobless rate to rise to 8.0 per cent and net jobs to fall to 90,000. The storm “did not substantively impact” the data, the department said.
President Barack Obama’s economic adviser said the jobs report provided further evidence the economy was continuing to recover from the severe 2008-2009 recession.
“Over the last 12 months, the unemployment rate has decreased by 1.0 percentage point as a result of growing employment, and the labour force participation rate has been essentially unchanged,” said Alan Krueger, chairman of the president’s Council of Economic Advisers.
The Labor Department said there was little change in the unemployment numbers in November. The long-term unemployed -- those without jobs for at least 27 weeks -- stood at 4.8 million, 40 per cent of the 12 million unemployed.
The number of unemployed is near the peak of the Great Depression, though the total population was much smaller than.
And today’s jobless have support from unemployment benefits crafted in then-Democratic president Franklin D. Roosevelt’s response to the depression, the New Deal in 1933.
The number of people who wanted and were available for work, and had looked for a job in the prior 12 months, totaled 2.5 million in the November numbers, barely budged from a year ago. They were not counted as unemployed because they had not sought work in the prior four weeks.
Job growth came from the private sector, which added 147,000 jobs, while government employment fell by 1,000.
The services sector gained 169,000 jobs, including almost 53,000 in the retail trade.
Analysts attributed the retail gain to an earlier than usual Thanksgiving holiday that kicked off the year-end shopping season.
The goods-producing sector shed 22,000 jobs, including a decline of 20,000 in construction and 7,000 in manufacturing.
“We are unlikely to see much more improvement in coming quarters since the uncertainty surrounding the fiscal cliff and government policies is likely prompting many employers to hold off on staffing moves,” said Sophia Koropeckyj of Moody’s Analytics.
Concerns are rampant that politicians will fail to find a compromise on longer term budget-deficit reduction to avoid the fast-approaching “fiscal cliff,” the combination of sharp federal government tax increases and spending cuts due in January that economists say will jolt the economy back into recession.
Sal Guatieri of BMO Capital Markets said the Federal Reserve would likely announce new stimulus measures after the Federal Open Market Committee wraps up a two-day policy meeting Wednesday.
Fed Chairman Ben Bernanke has highlighted that the unemployment rate remains “well above” what Fed officials want to see, justifying maintaining a loose monetary policy.