Analysts who had hoped that the ADP report on a significant rise in private hiring released Wednesday would be reflected in a better-than-previously-predicted jobs report from the Bureau of Labor Statistics were probably disappointed this morning. According to the bureau's seasonally adjusted figures, the private sector added 140,000 jobs in November. Yet another round of lay-offs in the public-sector, this time of 20,000 (mostly in state and local government), lowered the overall jobs gain to 120,000. The number of Americans without work for six months or more clocked in at 5.7 million in November, 43 percent of the total who are out of work.
Still jobless 47 months after the recession began: 13.3 million Americans. That's 594,000 fewer than last month, which sounds good, but more than half that number comprises people who have left the labor force.
Among the report's conflicting signals:
In a bad sign, the civilian labor force participation rate to fell 0.2 percent to 64.0 percent. It was better than that a year ago. The employment-population ratio rose 0.1 percent to 58.5 percent. In a good sign, revisions changed job gains previously reported for October from 80,000 to 100,000, and for September from 158,000 to 210,000.
The monthly jobs report combines information from two surveys, one of business establishments and one, the Current Population Survey, of tens of thousands of households. From the former is determined the number of new jobs created. From the latter is calculated the official unemployment rate known as U3. That fell to 8.6 percent from 9.0 percent in October, a two-year low. But the drop was at least half because of the workforce drop-outs.
An alternative measure of unemployment—U6—(which includes part-time workers who want full-time work and a portion but not all of the millions of people who have become too discouraged to look for work) fell sharply to 15.6 percent, but remains extremely high. And that may be at least partly a product of the holiday season, with part-timers temporarily asked to work full-time hours.
To get unemployment down to 6 percent in a semi-reasonable time frame (still well above what even conservative economists consider to be the "natural rate" of joblessness), the economy would have to add 13.3 million jobs by December 2014. That is 369,000 each month, every month. This would require annual rises in gross domestic product of at least 4 percent. We're nowhere near those figures.
The jobs report capped a week of generally upbeat economic news that helped send the volatile U.S. stock market soaring. There was another round of positive news from the Institute of Supply Management showing the 28th month of expansion in manufacturing. But it also showed a decrease in its manufacturing employment index. The Conference Board reported a rise in its Consumer Confidence Index after a drop in October. Initial claims for unemployment compensation continued floating up and down near the 400,000 level, better than in the spring, but still not low enough to generate sustained job growth. Light vehicle sales are at their highest level since August 2009, when the "Cash for Clunkers" program boosted purchases.
Construction has increased even as the number of workers has fallen. Private residential construction is still only at 65 percent of its pre-recession peak. And public construction is on the downturn as the remnants of the federal stimulus package passed in early 2009 end.
This week there was worrisome information from the Challenger report regarding lay-offs:
"With one month remaining in 2011, job cuts for the year total 564,297, officially surpassing the 2010 year-end total of 529,973. The 11-month total is 13 percent higher than the 497,969 job cuts announced over the same period a year ago."
What does this all mean for the long-term direction of the economy, especially for the millions of officially unemployed and underemployed? Because of the conflicting signals, the answer to that question still requires substantial guesswork. The Federal Reserve's "Beige Book," an eight-times-a-year summary of the economy, showed that economic activity increased at a slow to moderate pace in 11 of the nation's 12 Fed regions. In other words, still sluggish growth and not enough to significantly reduce the unemployment rate at more than a tortoise's pace.
Among other statistics in today's report:
• Employment in the retail trade rose 50,000
• Construction fell 12,000
• The average workweek for production and non-supervisory workers held steady 34.3 hours.
• The average hourly earnings for all employees on private nonfarm payrolls by 2 cents, to $23.18. Inflation in the past 12 months has risen 3.6 percent; wages have risen 1.8 percent.
To get a better handle on the BLS monthly job report, I urge you to read my post, Some advice on reading the numbers.