Under The Hood Of November’s Big Jobs Miss

The November jobs report suggested labor market momentum in the US decelerated materially during the survey period.

It’s possible that December’s sample could capture more job losses associated with new restrictions on business activity and mobility, considering America’s epidemic is worsening by the day (quite literally on some metrics).

The headline print missed consensus by a country mile, and was easily the slowest pace of job creation since the rebound from the apocalyptic losses suffered in April.

Read more: Labor Market Momentum Decelerates Sharply As November Jobs Report Misses

“These figures are substantially weaker than other labor surveys had indicated and leave us in a troubling situation with more COVID cases, hospitalizations and movement restrictions coming day by day,” ING said.

Looking under the proverbial hood, one finds that losses in retail and government jobs were the culprit for November’s underwhelming headline. Government employment dropped a third month. 93,000 temporary workers hired for the 2020 Census were let go. 21,000 jobs in local and government education were shed.

In retail, 35,000 job losses “reflected less seasonal hiring,” the BLS said, noting declines in general merchandise stores, sporting goods, hobbies, books, music stores, electronics and
appliance outlets (Get it? “Outlets”?), as well as health and personal care stores.

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 (figure above).

The chart (below) speaks for itself — and rather loudly, at that.

Not surprisingly, the bright spots were in transportation and warehousing, as well as health care.

Of all private sector gains, nearly half came from transportation and warehousing, which added 145,000 jobs. As Bloomberg’s Matthew Boesler wrote, “that brought its share of total employment to 4.58%, up a tenth of a percentage point in a single month, giv[ing] you an idea of how concentrated job creation is becoming as we head into the holiday season and coronavirus cases surge.”

At a more granular level, the economy added 82,000 “couriers and messengers” and 37,000 new warehouse and storage workers.

Checking in on metrics associated with structural damage and the dreaded “scarring” effect, the number of Americans jobless for 27 weeks or more jumped 385,000 to 3.9 million.

That is nearly 37% of the unemployed, up 4.5 percentage points as a share of the total jobless from October.

As for permanent job losses, that figure remains stuck north of 3.7 million. It rose again in November (albeit slightly) after falling in October.

I’ll repeat my language from last month: A situation that finds 2.4 million more job losses classified as “permanent” versus just nine months ago clearly argues for additional fiscal support.

On the bright side for equality, the African American-white jobless gap narrowed to 4.4 percentage points from 4.8 in October.

“At a minimum, there will be intensifying pressure to extend unemployment benefits that are scheduled to expire at month-end and to find money to fund the vaccination roll out,” ING went on to say Friday. “However, Republican Senate leaders continue to sound more cautious — for now.”

Hopefully, the lackluster payrolls report will help galvanize support for the $908 billion bipartisan bill that both top Democrats and moderate Republicans floated this week. As of Thursday evening, Mitch McConnell was still arguing for a $500 billion package.


 

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3 thoughts on “Under The Hood Of November’s Big Jobs Miss

  1. I was just out on the St. Louis Fed site looking at the Labor Force Partciipation Rate (CIVPART) series. I’ll be curious after the pandemic to see if this begins a new trend to the upside, or downside. (I have my guesses.)

    In looking at the Fed series and taking context from the above charts, which are really good, by the way, it’s easy to imagine a scenario where the gap between pre-pandemic and post-pandemic is going to have to be filled with government support for the permanently unemployed.

    The long term unemployment picture and the LFPR are not good. Maybe we get lucky and there are second-order effects that will be positive, e.g., a renaissance in second-tier cities.

    For sure, aside from what is looking like how the US gets into UBI, I can only hope we print what’s needed for investments that make our future economy more productive. While we do need new industries, we also need policies that help the services…get people employed again.

    A lot of solutions for the return of services might end up having to be local and small, e.g., easier to get permits for sidewalk cafes and don’t charge fees, reduced hours for when parking rates apply, etc.

    It’s going to be up to communities to figure out how to come back. The point can be argued that court games in DC, lack of effective policy response (both fiscal and social), and unemployment payments, are three constants we can expect from the federal level.

    1. Yes, any labor market data needs to be filtered through the lens of LFPR, which is, and has been, absolutely horrific. It’s why the headline jockeying every month is more noise than signal. By the way, last time LFPR was this low, about 50 years ago, it was still possible for households to be solvent on a single income.

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