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.
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.