4th
Unemployment: 10.0%
You read that correctly, the official unemployment rate just decreased. The November Employment Situation has been released. It blew away expectations. The US jobs number changed by -11,000 last month. The Bloomberg consensus range was -160,000 to -75,000. And while we are losing jobs, people are apparently leaving the workforce faster. The unemployment rate dropped from 10.2% to 10.0%. For the rate, the Bloomberg consensus range was 10.0% to 10.2%. From the report:
The unemployment rate edged down to 10.0 percent in November, and nonfarm payroll employment was essentially unchanged (-11,000), the U.S. Bureau of Labor Statistics reported today. In the prior 3 months, payroll job losses had averaged 135,000 a month. In November, employment fell in construction, manufacturing, and information, while temporary help services and health care added jobs.
In November, both the number of unemployed persons, at 15.4 million, and the unemployment rate, at 10.0 percent, edged down. At the start of the recession in December 2007, the number of unemployed persons was 7.5 million, and the jobless rate was 4.9 percent.
The number of people leaving the labor force is responsible for the improvement in the unemployment rate:
About 2.3 million persons were marginally attached to the labor force in November, an increase of 376,000 from a year earlier. (The data are not seasonally adjusted.) These individuals were not in the labor force, wanted and were available for work, and had looked for a job sometime in the prior 12 months. They were not counted as unemployed because they had not searched for work in the 4 weeks preceding the survey. (See table A-13.)
Among the marginally attached, there were 861,000 discouraged workers in November, up from 608,000 a year earlier. (The data are not seasonally adjusted.) Discouraged workers are persons not currently looking for work because they believe no jobs are available for them. The remaining 1.5 million persons marginally attached to the labor force had not searched for work in the 4 weeks preceding the survey for reasons such as school attendance or family responsibilities.
Back to the good news: Previous months were revised to be significantly better:
The change in total nonfarm payroll employment for September was revised from -219,000 to -139,000, and the change for October was revised from -190,000 to -111,000.
The only problem I have with this data is that someone from the department of labor has already come out and stated that they underestimated the number of jobs lost by almost a million jobs, and these losses were never absorbed into the reported data. This error has to do with the birth-death model used to account for new business creation / loss. In just about every month, it has added jobs, even in sectors of the economy that were collapsing. While the model is known to perform poorly at economic turning points, remember that this downturn has been longer than average. By any metric, we were well past an economic turning point when the model was still spewing nonsense. Note that this would only impact the number of jobs lost/gained in aggregate, it would not impact the unemployment rate (that number comes from the household survey, and is disconnected from the establishment survey).
Gripe over, more good news: Slack is being taken out of the employment environment as well:
In November, the average workweek for production and nonsupervisory workers on private nonfarm payrolls rose by 0.2 hour to 33.2 hours. The manufacturing workweek increased by 0.3 hour to 40.4 hours. Factory overtime rose by 0.1 hour to 3.4 hours. Since May, the manufacturing workweek has increased by 1.0 hour.
There are huge discrepancies between this report and the ADP report (though that’s not especially unusual). The difference in the two reports is not due to the lack of accounting for government jobs in the ADP report. The difference in reported jobs lost was 179,000, but the net change due to government was +7,000 jobs. All categories of government (federal, state, and local) added jobs in November, though state and local job increases were entirely due to education jobs (the ex-education numbers were negative for both otherwise). At the federal level, postal jobs were lost, but were made up for in other areas.
Other areas of the report were positive: The best official measure of underemployment has also dropped. The U-6 number from Table A-12, the alternative measures of labor underutilization (BLS term), decreased from 17.5% to 17.2%.
A note about upcoming changes to the report:
Three new tables will be added to the household survey section (“A tables”) of the release. These new tables cover the employment status of veterans, persons with a disability, and the foreign born.
Dataphiles and racists everywhere rejoice.
This report was significantly better than expected. Fewer jobs were lost than anticipated. Previous months were revised upwards. Aside from the usual gripes about tricky statistics and people leaving the labor force by giving up, the only (new) criticism seems to be that the largest contributor to the better-than-expected number is the massive increase in temporary workers. Still, that’s only 52 thousand jobs, leaving almost another 50 thousand jobs to close the gap in expectations.
