Labor Market Momentum Decelerates Sharply As November Jobs Report Misses

Labor Market Momentum Decelerates Sharply As November Jobs Report Misses

The US economy added 245,000 jobs in November, far fewer than economists anticipated, underscoring concerns that labor market momentum is waning while lawmakers dither on the next round of fiscal stimulus.

The market was looking for 475,000 on the headline print. The news comes after a disappointing ADP report earlier this week and a day after a better-than-expected read on jobless claims.

Revisions added 39,000 to September’s headline NFP number and subtracted 28,000 from October’s print.

The range of estimates for November was -100,000 to 750,000, again demonstrating the futility of forecasting during the unprecedented tumult engendered by the pandemic.

Private payrolls rose 344,000, far fewer than the 540,000 the market expected. Manufacturing jobs missed too, rising 27,000 versus expectations for a 40,000 gain.

The labor market is still 9.8 million jobs short of pre-pandemic levels.

Leisure and hospitality added just 31,000 jobs in November. There are still 3.4 million fewer jobs in the sector than there were prior to COVID-19. Disconcertingly, employment in food services and drinking places dropped by 17,000.

The unemployment rate moved lower to 6.7%, in line with estimates.

Average hourly earnings rose at triple the expected pace MoM, jumping 0.3% versus expectations for a 0.1% gain. The YoY read was also hot, at 4.4% compared to consensus 4.2%.

The participation rate moved lower, to 61.5% from 61.7%. That’s “not the direction one would like to see at this stage in the recovery,” BMO’s Ian Lyngen remarked. “Clearly the resurgence of COVID-19 and the lockdowns are having an impact, but not such a dramatic one as to recast expectations,” he added.

It’s hard to see how this is anything other than a disappointment, although the term “disappointment” implies it’s somehow a surprise. With states and localities reinstating lockdown protocols as virus caseloads and hospitalizations surge, it’s hardly a shock that labor market momentum would wane.

Ostensibly, this will increase the sense of urgency on Capitol Hill around coming to an agreement on a fiscal stimulus package. This week has been defined by a debate between Mitch McConnell and Steve Mnuchin, on one hand, and a bipartisan group of lawmakers on the other.

The bipartisan proposal calls for $908 billion in spending, while McConnell and Mnuchin are still pressing for a smaller package worth some $500 billion.

It’s not difficult to imagine the labor market situation getting worse in December as the lockdowns and infections continue to cast a pall over the “here and now,” even as multiple vaccines stoke optimism about 2021.


11 thoughts on “Labor Market Momentum Decelerates Sharply As November Jobs Report Misses

  1. I do not fight the tape. However, so many things could go differently or later. The stock and bond markets are pricing it as though Happy Days are here again is assured. The experts on the virus I have seen, suggest that the vaccine will make a big difference but it may take 9 months or more for it to really make a big difference. The market looks like it is pricing 2-4 months.

    1. I agree, but with rates where they are, the discounting impact of timing is pretty small (at least, that’s the current narrative.) Lots of other things to worry about to be sure, but timing delays don’t seem to be making a difference. As with so many other factors, that will be true until it isn’t.

    2. I heard a quick blurb on the radio which said a new Pew poll shows only 60% of Americans plan to get the vaccine.

      I wonder if some of the remaining 40% plan on getting it after a month or two when they are more comfortable about the safety? Those folks can watch the Guinea Pig front liners and old geezers who will get it first in any case so that may work out. Unless some nasty side effect headlines appear among the first recipients.

  2. While some cast reluctant vacciners near to the level of a NEandrathal, a rational mind could point out RNA vaccines are new techonolgy. Only the AstraZeneca Vaccine is traditional vaccine technology. So waiting to be a second or third wave does seem rational if you think the risk of death for you is low.

    1. I found and read through the survey results. Of the 40% who are wary, 40% of them are inclined to get one after watching for a while. The remaining 20% of the total will not get one no matter what.

    2. check that box. It is not irrational to see if there are any widespread side effects that are unknown. Even in things that are deemed safe, such as statins for treating cholesterol. Some of the early ones led to joint pains, an unknown side effect at the time of approval. If RNA is a new technology, why not wait and see what happens, to see if they are really safe. It seems logical in the context of the rushed timeline.

  3. Pre-Covid the US had approximately 90k ICU beds and uncertain ability to staff them full time on an ongoing basis. From friends who work in hospitals I have heard they have done what they can to convert other areas of the hospital to ICU capability or as close as possible. If I’m generous that’s probable 20% surge capacity but no additional staff and generally speaking with PPE limitations remaining though not as bad as the initial months. By January I suspect we’re going to be dangerously close to the entire healthcare system collapsing under the prolonged stress on personnel and materials. What happens then is anyone’s guess at this point, do we see the military deploy field hospitals across the country? Do we simply give up on treatment and impose full lockdown for a month across the entire country? A vaccine is coming but I’m not sure it will be in time to avert the crisis we face this winter even if there is enough to inoculate every healthcare worker this month.

    1. Remember also that the weirdness of FDA stat protocols is such that the forecast 95% effective outcomes is based on the results enjoyed by a few hundred volunteers. And we will all need to go back for shot two. How many who got side effects will do that? Also remember how many listened when the fearless leader briefly suggested maybe drinking bleach would get us all back to our work and our bars. Now we see that supply chain issues will cut early delivery promises in half. What if you get shot one and when it’s time for shot two they say, “Oops, no more left for now. Come back in a month?”

    2. There are reportedly some short term side effects from the vaccine- which may cause health care workers to sit on the bench for a liltte while once they are vaccinated. Could add more stress in January-February

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